USDA confirmed the corn outlook for sharply higher planted area, production and ending stocks for the 2012/13 season helped to pressure the market early in the day and drive December corn down to the lowest level since January 20th. May Corn finished up 1 1/2 at 644, 1/2 off the high and 7 up from the low. July Corn closed up 1 3/4 at 646 1/2. This was 7 3/4 up from the low and 3/4 off the high. May corn closed 1 1/2 cents higher on the session but down 1 1/4 cents for the week.
Ending stocks were pegged at 1.616 billion bushels vs. 801 million this year and stocks/usage jumps to 12 per cent from 6.3 per cent this season. South Korea bought 55,000 tonnes of corn at their optional origin tender overnight. However, lows for the session were made early in the day and the market saw a solid recover as talk of China demand and ideas that demand for US corn could remain strong due to lower than expected production in South America helped to support.
Weekly export sales came in at 840,800 metric tonnes which was near the low end of trade expectations. As of February 16th, cumulative corn sales stand at 69.9 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 64.8 per cent.
Sales of 460,000 metric tonnes are needed each week to reach the USDA forecast. March Rice finished up 0.255 at 14.465, equal to the high and 0.245 up from the low.
Before looking at the upcoming USDA cattle on feed report, a few words are in order about the USDA Outlook forum currently under way in Washington DC. USDA is expected to issue its unofficial projection of grain supplies for 2012/13 during the outlook presentations and markets are paying close attention to some of their initial assumptions as they will influence the official estimates that will be released in May. In his presentation, the USDA chief economist Joseph Glauber will note that USDA expects farmers to plant about 94 million acres of corn this spring, 2.1 million acres more than the previous year. Combined wheat, corn and soybean acres are expected to increase by 5.6 million acres. Ethanol use also is expected to slow down and USDA now pegs ethanol demand for 2012/13 at 4.95 billion bushels compared to the current year estimate of 5 billion bushels. Increased acres, stagnant demand for ethanol and limited feed use (compared to prior years) will likely cause USDA to bolster its estimates for corn ending stocks in 2012-13. USDA now estimates corn prices for 2012/13 at $5 per bushel, down almost 20% from year prior. There is plenty that could go wrong this year and pressure prices higher but this will be first salvo in what promises to be another volatile year considering uncertainty about the size of current corn stocks, escalating energy prices and dry conditions in key corn production areas.
The upcoming cattle on feed report is expected to show that on feed supplies will likely be steady compared to the previous month although about 2.5% higher than a year ago. Despite the higher feedlot inventories, cattle prices continue to escalate as a larger portion of those cattle have yet to reach market weights. The supply of feeders outside of feedlots is tight and this is reflected in feeder prices which continue to hit record highs on a daily basis.
Feeder supplies are expected to remain tight in part because producers are expected to hold back a few more replacement heifers. As usual, analysts polled ahead of the report show a wide range of opinions regarding the number of cattle placed in January (see table). On average, they expect placements about 1.2% below year ago levels. Despite strong cattle prices outfront, feedlots are cautious about placing $160 feeders with $6+ corn. Cattle futures have surged higher in recent days (although they were down yesterday) as packers push through higher prices. The big question mark, however, is the outlook for cattle and beef prices after April 15. Will current record high beef values scare away retailers and force them to limit beef features into the grilling season? Last year cattle broke sharply in May and memories of those loses are still fresh. As for marketings, the analyst survey showed they expect feedlot sales about steady with a year ago. The steer and heifer slaughter data for January shows slaughter was only slightly lower than a year ago.
Ending stocks were pegged at 1.616 billion bushels vs. 801 million this year and stocks/usage jumps to 12 per cent from 6.3 per cent this season. South Korea bought 55,000 tonnes of corn at their optional origin tender overnight. However, lows for the session were made early in the day and the market saw a solid recover as talk of China demand and ideas that demand for US corn could remain strong due to lower than expected production in South America helped to support.
Weekly export sales came in at 840,800 metric tonnes which was near the low end of trade expectations. As of February 16th, cumulative corn sales stand at 69.9 per cent of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 64.8 per cent.
Sales of 460,000 metric tonnes are needed each week to reach the USDA forecast. March Rice finished up 0.255 at 14.465, equal to the high and 0.245 up from the low.
Before looking at the upcoming USDA cattle on feed report, a few words are in order about the USDA Outlook forum currently under way in Washington DC. USDA is expected to issue its unofficial projection of grain supplies for 2012/13 during the outlook presentations and markets are paying close attention to some of their initial assumptions as they will influence the official estimates that will be released in May. In his presentation, the USDA chief economist Joseph Glauber will note that USDA expects farmers to plant about 94 million acres of corn this spring, 2.1 million acres more than the previous year. Combined wheat, corn and soybean acres are expected to increase by 5.6 million acres. Ethanol use also is expected to slow down and USDA now pegs ethanol demand for 2012/13 at 4.95 billion bushels compared to the current year estimate of 5 billion bushels. Increased acres, stagnant demand for ethanol and limited feed use (compared to prior years) will likely cause USDA to bolster its estimates for corn ending stocks in 2012-13. USDA now estimates corn prices for 2012/13 at $5 per bushel, down almost 20% from year prior. There is plenty that could go wrong this year and pressure prices higher but this will be first salvo in what promises to be another volatile year considering uncertainty about the size of current corn stocks, escalating energy prices and dry conditions in key corn production areas.
The upcoming cattle on feed report is expected to show that on feed supplies will likely be steady compared to the previous month although about 2.5% higher than a year ago. Despite the higher feedlot inventories, cattle prices continue to escalate as a larger portion of those cattle have yet to reach market weights. The supply of feeders outside of feedlots is tight and this is reflected in feeder prices which continue to hit record highs on a daily basis.
Feeder supplies are expected to remain tight in part because producers are expected to hold back a few more replacement heifers. As usual, analysts polled ahead of the report show a wide range of opinions regarding the number of cattle placed in January (see table). On average, they expect placements about 1.2% below year ago levels. Despite strong cattle prices outfront, feedlots are cautious about placing $160 feeders with $6+ corn. Cattle futures have surged higher in recent days (although they were down yesterday) as packers push through higher prices. The big question mark, however, is the outlook for cattle and beef prices after April 15. Will current record high beef values scare away retailers and force them to limit beef features into the grilling season? Last year cattle broke sharply in May and memories of those loses are still fresh. As for marketings, the analyst survey showed they expect feedlot sales about steady with a year ago. The steer and heifer slaughter data for January shows slaughter was only slightly lower than a year ago.
Commodity prices of corn at the farm level in North Sumatra (North Sumatra), experienced a surge to Rp 2,400 per kg, an increase of approximately 33.33% from the previous week worth Rp 1,800 per kg. The price increase is expected to make manufacturers reduce the supply of corn imports for livestock feed requirements.
Chairman of the Indonesian Corn Growers Association (Hipajagi) of North Sumatra, Sebayang Church said that since this week the price of corn has increased and this is a big advantage for farmers. Moreover, the current harvest is already entered in which the production will be abundant and sufficient to meet the needs of animal feed manufacturers.
"This is the result of our struggle who requested the manufacturer to reduce the supply of imported corn for their needs. And expect during harvest, the import is stopped first," he told MedanBisnis, Thursday (19 / 1).
He said corn imports that enter the surge in North Sumatra and without supervision. To that end, the government should limit the amount of imports that can be enjoyed dipetani sale price. "We asked for import post-harvest in the stop. Namely the January to March and July through September. If corn prices fell during the harvest, farmers' reluctance to raise the commodity and it is feared the more difficult the government itself," he said.
Moreover, added the Church, North Sumatra corn farmers also asked agarpemerintah set the reference price of corn again. Because, for three years, there has been no government set a benchmark price of corn, which can suppress speculative traders who could depress prices.
Farmer said he, need capital at least Rp 10 million per ha. This capital loan with an interest rate of 5% per month or about 25% to harvest.
While based on the data of Department of Agriculture of North Sumatra, until December 2011 corn production reached 1,239,178 tons of realization of the harvest area of 243,645 ha and 249,233 ha of planting. This figure is lower than Forecast Figures (Aramaic) III 2011 reached 1,240,528.
Kasubdis of Program Department of Agriculture of North Sumatra, Lusyantini say, the production target in Aramaic is indeed lower than Fixed rate (Roof) 2010 as many as 1,377,716 tons, up by 211,170 tonnes compared to corn production in 2009. "This increase is due to increase in harvest area of 27,040 hectares or 10.91%, and the yield per hectare also increased by 3.05 quintals per hectare, or 6.48%," he explained.
For Aram III, maize production in 2011 is estimated sebesar1.240.528 tons, down by 137,190 tonnes compared to production Roof in 2010. Decline in production caused by a decrease in harvest area of 31,052 hectares or 11.30%, while the yield per hectare has increased by 0.76 quintals per hectare, or 1.52%.
Food Livestock Association (GPMT) of North Sumatra, Bethman Siagian states, all corn production in North Sumatra in Indonesia and has absorbed entrepreneurs fodder. But supplies are lacking or are only able to meet 60% of needs. These conditions make the company should take in a complete lack of maize imports.
"Because kuranglah, so imported. We did not want to import as much risk and little hard though once in a while sometimes the price of corn imports cheaper than locally," he said.
Bethman Admittedly, it will not import if farmers are entering harvest season due to production generated a lot of farmers and factory-sufficient. Unfortunately, the abundant production did not last long even not occur in every month.
"Our needs continue to be met per month have about 50,000 tons," said Bethman. If the policy is stopped imports of corn, he added, will impact on prices of poultry, animal feed and this will burden the consumer society. Besides, farmers obtained maize production is not all used for animal feed only, but used other industrial needs.
-
Chairman of the Indonesian Corn Growers Association (Hipajagi) of North Sumatra, Sebayang Church said that since this week the price of corn has increased and this is a big advantage for farmers. Moreover, the current harvest is already entered in which the production will be abundant and sufficient to meet the needs of animal feed manufacturers.
"This is the result of our struggle who requested the manufacturer to reduce the supply of imported corn for their needs. And expect during harvest, the import is stopped first," he told MedanBisnis, Thursday (19 / 1).
He said corn imports that enter the surge in North Sumatra and without supervision. To that end, the government should limit the amount of imports that can be enjoyed dipetani sale price. "We asked for import post-harvest in the stop. Namely the January to March and July through September. If corn prices fell during the harvest, farmers' reluctance to raise the commodity and it is feared the more difficult the government itself," he said.
Moreover, added the Church, North Sumatra corn farmers also asked agarpemerintah set the reference price of corn again. Because, for three years, there has been no government set a benchmark price of corn, which can suppress speculative traders who could depress prices.
Farmer said he, need capital at least Rp 10 million per ha. This capital loan with an interest rate of 5% per month or about 25% to harvest.
While based on the data of Department of Agriculture of North Sumatra, until December 2011 corn production reached 1,239,178 tons of realization of the harvest area of 243,645 ha and 249,233 ha of planting. This figure is lower than Forecast Figures (Aramaic) III 2011 reached 1,240,528.
Kasubdis of Program Department of Agriculture of North Sumatra, Lusyantini say, the production target in Aramaic is indeed lower than Fixed rate (Roof) 2010 as many as 1,377,716 tons, up by 211,170 tonnes compared to corn production in 2009. "This increase is due to increase in harvest area of 27,040 hectares or 10.91%, and the yield per hectare also increased by 3.05 quintals per hectare, or 6.48%," he explained.
For Aram III, maize production in 2011 is estimated sebesar1.240.528 tons, down by 137,190 tonnes compared to production Roof in 2010. Decline in production caused by a decrease in harvest area of 31,052 hectares or 11.30%, while the yield per hectare has increased by 0.76 quintals per hectare, or 1.52%.
Food Livestock Association (GPMT) of North Sumatra, Bethman Siagian states, all corn production in North Sumatra in Indonesia and has absorbed entrepreneurs fodder. But supplies are lacking or are only able to meet 60% of needs. These conditions make the company should take in a complete lack of maize imports.
"Because kuranglah, so imported. We did not want to import as much risk and little hard though once in a while sometimes the price of corn imports cheaper than locally," he said.
Bethman Admittedly, it will not import if farmers are entering harvest season due to production generated a lot of farmers and factory-sufficient. Unfortunately, the abundant production did not last long even not occur in every month.
"Our needs continue to be met per month have about 50,000 tons," said Bethman. If the policy is stopped imports of corn, he added, will impact on prices of poultry, animal feed and this will burden the consumer society. Besides, farmers obtained maize production is not all used for animal feed only, but used other industrial needs.
-
Soybeans commodity for March delivery gained 2.4 percent to $11.8575 a bushel at 9:56 a.m. London time on the Chicago Board of Trade, the first gain since Jan. 9. The most-active contract dropped 3.2 percent last week.
Corn for March delivery rose 1.9 percent to $6.1075 a bushel after slumping 6.8 percent last week. A close at that price would be the biggest gain since Dec. 27. Trading in Chicago was closed yesterday for the Martin Luther King Jr. holiday in the U.S.
Soybeans and corn advanced for the first time in a week on speculation that China will ease monetary policy after the economy expanded at its slowest pace in 10 quarters, potentially boosting demand for raw materials.
China’s gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said today. China may ease lending curbs and increase spending to bolster the world’s second-biggest economy, boosting demand for grains and oilseeds, said Gary Mead, an analyst at VM Group.
“This must be a reaction to China’s GDP being about what people thought it would be,” Mead said by phone from London today. “China’s tight monetary policy might be eased and therefore Chinese demand will begin to rise.”
Prices also gained as drought caused by La Nina persists in South America, threatening to curb global supply further.
Corn and soybean crops in Brazil’s southernmost state of Rio Grande do Sul will be harmed by more dry weather in the next 10 days, weather forecaster Somar Meteorologia said yesterday. In Argentina, the second-largest corn shipper, a heat-wave was forecast over the next two weeks and little rain was expected, said Maximiliano Zavala, a forecaster at the Buenos Aires Cereals Exchange.
Corn output in Argentina will probably drop to 21.4 million metric tons in the current growing season, “significantly” lower than expected, after dry weather damaged the crop, the Rosario Cereals Exchange said Jan. 13. That’s about a third less than the 30 million tons expected by Argentine corn group Maizar in November, before the drought began.
“There’s a question over the size of the South American crop,” Mead said. “It’s still early and it’s not ruined but some damage will be done.”
Corn for March delivery rose 1.9 percent to $6.1075 a bushel after slumping 6.8 percent last week. A close at that price would be the biggest gain since Dec. 27. Trading in Chicago was closed yesterday for the Martin Luther King Jr. holiday in the U.S.
Soybeans and corn advanced for the first time in a week on speculation that China will ease monetary policy after the economy expanded at its slowest pace in 10 quarters, potentially boosting demand for raw materials.
China’s gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said today. China may ease lending curbs and increase spending to bolster the world’s second-biggest economy, boosting demand for grains and oilseeds, said Gary Mead, an analyst at VM Group.
“This must be a reaction to China’s GDP being about what people thought it would be,” Mead said by phone from London today. “China’s tight monetary policy might be eased and therefore Chinese demand will begin to rise.”
Prices also gained as drought caused by La Nina persists in South America, threatening to curb global supply further.
Corn and soybean crops in Brazil’s southernmost state of Rio Grande do Sul will be harmed by more dry weather in the next 10 days, weather forecaster Somar Meteorologia said yesterday. In Argentina, the second-largest corn shipper, a heat-wave was forecast over the next two weeks and little rain was expected, said Maximiliano Zavala, a forecaster at the Buenos Aires Cereals Exchange.
Corn output in Argentina will probably drop to 21.4 million metric tons in the current growing season, “significantly” lower than expected, after dry weather damaged the crop, the Rosario Cereals Exchange said Jan. 13. That’s about a third less than the 30 million tons expected by Argentine corn group Maizar in November, before the drought began.
“There’s a question over the size of the South American crop,” Mead said. “It’s still early and it’s not ruined but some damage will be done.”
Global corn production for 2011-2012 is projected at a new record high of 867.5 million tons, despite a 3.5-million-ton decline year-to-year in the U.S. Foreign corn production is expected to be up 43.4 million tons from 2010-2011. China 2011-2012 production is raised 7.3 million tons this month based on the recently released estimate from the National Bureau of Statistics. Slightly higher area and a 3% increase in yields from the previous forecast boost this year’s crop to a record 191.8 million tons. This year’s yield estimate is up 3% (3 bu./acre) from the previous record in 2008-2009 and up 9% (8 bu.) from the recent low in 2009-2010. Weather was generally favorable for this year’s crop; record yields were reported despite summer conditions in the northeast growing areas that were somewhat warmer and drier than in 2008-2009. Corn production is also raised 1.0 million tons for EU-27 and 0.7 million tons for Canada based on the latest government reports.
U.S. feed grain ending stocks for 2011-2012 are projected slightly higher with a small decrease in domestic corn use and a small increase in oats imports. Corn food, seed and industrial use is lowered 5 million bushels with early marketing-year corn use for sweeteners down slightly year on year. Projected corn ending stocks rise 5 million bushels to 848 million.
The 2011-2012 season-average farm price for corn is projected 30¢ lower on each end of the range to $5.90-6.90/bu. Corn prices received by producers have been reported 40-50¢/bu. below prevailing cash market bids reflecting apparent deliveries of grain that was forward priced below $6/bu. ahead of planting this past spring. Declines in futures prices since early November have also tempered the outlook for seasonal price gains over the coming months.
Global coarse grain supplies for 2011-2012 are projected 7.4 million tons higher as lower beginning stocks for corn and barley are more than offset by an 8.5-million-ton increase in corn production, mostly reflecting higher output from China. Global corn beginning stocks for 2011-2012 are reduced 0.8 million tons, with a downward revision to 2010-2011 production for South Africa.
World coarse grain trade for 2011-2012 is mostly unchanged this month with corn and sorghum imports and exports down slightly, but partly offset by small increases for barley. Corn imports are lowered 0.5 million tons for EU-27 with the larger crop and lower expected shipments from Serbia. Global corn consumption is raised mostly reflecting a 2.0-million-ton increase in China corn feeding. Global corn ending stocks are projected 5.6 million tons higher, mostly on increased stocks in China. At the projected 127.2 million tons, world ending stocks remain at a five-year low.
U.S. feed grain ending stocks for 2011-2012 are projected slightly higher with a small decrease in domestic corn use and a small increase in oats imports. Corn food, seed and industrial use is lowered 5 million bushels with early marketing-year corn use for sweeteners down slightly year on year. Projected corn ending stocks rise 5 million bushels to 848 million.
The 2011-2012 season-average farm price for corn is projected 30¢ lower on each end of the range to $5.90-6.90/bu. Corn prices received by producers have been reported 40-50¢/bu. below prevailing cash market bids reflecting apparent deliveries of grain that was forward priced below $6/bu. ahead of planting this past spring. Declines in futures prices since early November have also tempered the outlook for seasonal price gains over the coming months.
Global coarse grain supplies for 2011-2012 are projected 7.4 million tons higher as lower beginning stocks for corn and barley are more than offset by an 8.5-million-ton increase in corn production, mostly reflecting higher output from China. Global corn beginning stocks for 2011-2012 are reduced 0.8 million tons, with a downward revision to 2010-2011 production for South Africa.
World coarse grain trade for 2011-2012 is mostly unchanged this month with corn and sorghum imports and exports down slightly, but partly offset by small increases for barley. Corn imports are lowered 0.5 million tons for EU-27 with the larger crop and lower expected shipments from Serbia. Global corn consumption is raised mostly reflecting a 2.0-million-ton increase in China corn feeding. Global corn ending stocks are projected 5.6 million tons higher, mostly on increased stocks in China. At the projected 127.2 million tons, world ending stocks remain at a five-year low.
Corn prices in Chicago may average $6.60 a bushel in the 2011-2012 marketing year, down from a previous estimate of $7.25, according to Morgan Stanley. Corn may be “one of the weaker commodities in 2012,” partly because of record supplies from South America in the first quarter, Hackett Financial Advisors said Dec. 2.
Corn prices in Chicago slipped 1.9 percent last week after the USDA on Dec. 9 raised China’s corn output estimate for this year by about 7 million tons from a previous outlook to a record 192 million tons, in line with China’s official estimate.
It’s “a joke” that the USDA adopted this figure given China’s limited yield and land, Feng said. Yigu projected 170 million tons, compared with 166 million tons by Shanghai JC and 189.2 million tons by Geneva-based SGS SA.
Corn prices in China will be “range-bound” between 2,200 yuan and 2,400 yuan a ton in the next few months, Yigu’s Feng said. China said Dec. 19 it would buy domestic corn to support farming. The policy effectively sets a price floor of about 2,200 yuan in Dalian, the price-setting center in China, said Feng. Shipping to Shenzhen from Dalian is about 40-60 yuan a ton, according to Shanghai JC.
The upper range of next year’s domestic price depends on feed demand from the livestock industry and corn processors, said Feng. The government may allow a gain of 100 yuan to 200 yuan for increased production costs, he said.
Corn prices in Chicago slipped 1.9 percent last week after the USDA on Dec. 9 raised China’s corn output estimate for this year by about 7 million tons from a previous outlook to a record 192 million tons, in line with China’s official estimate.
It’s “a joke” that the USDA adopted this figure given China’s limited yield and land, Feng said. Yigu projected 170 million tons, compared with 166 million tons by Shanghai JC and 189.2 million tons by Geneva-based SGS SA.
Corn prices in China will be “range-bound” between 2,200 yuan and 2,400 yuan a ton in the next few months, Yigu’s Feng said. China said Dec. 19 it would buy domestic corn to support farming. The policy effectively sets a price floor of about 2,200 yuan in Dalian, the price-setting center in China, said Feng. Shipping to Shenzhen from Dalian is about 40-60 yuan a ton, according to Shanghai JC.
The upper range of next year’s domestic price depends on feed demand from the livestock industry and corn processors, said Feng. The government may allow a gain of 100 yuan to 200 yuan for increased production costs, he said.
High consumption of corn commodity make China import corn about 7 million tons in 2012-2013 after 4 million metric tons in 2011-2012. Soybean imports will likely rise 12% on year in 2011-12 to 58.5 million tons under a baseline scenario, and by 15% or more to exceed 60 million tons in best-case.
Sleeping in China Economy next year is unlikely to weaken the country's agricultural demand, since the government can secure global supplies to replenish low domestic inventories. As inflation eases and crush margins improve, Rabobank forecast a rebound in China palm oil demand in 2011-12, up 5% to a record 6 million tons.
In the U.S., Corn basis levels at the U.S. Gulf slipped 3 cents for the spot month. Soybean Gulf basis levels, however, jumped 1 to 5 cents versus futures, according to U.S. Department of Agriculture data. Cash grain markets remain strong versus futures prices, but could begin to soften as grain begins to move more freely.
A lack of farmer selling has boosted cash market prices and limited losses in futures throughout the fall. Expectations that prices could go higher and farmers' stable financial positions after a year of sharply higher crop prices have encouraged farmers to hold on to supplies.
In first week December 2011 Cash corn's Chicago Board of Trade futures shrunk to 8 1/2 cents, from 11 1/2 cents at the start of the week, according to a national cash grain index maintained by the Minneapolis Grain Exchange. Cash soybeans' discount to January CBOT futures shrunk 1 1/2 cents during that time period, to 43 1/2 cents.
Sleeping in China Economy next year is unlikely to weaken the country's agricultural demand, since the government can secure global supplies to replenish low domestic inventories. As inflation eases and crush margins improve, Rabobank forecast a rebound in China palm oil demand in 2011-12, up 5% to a record 6 million tons.
In the U.S., Corn basis levels at the U.S. Gulf slipped 3 cents for the spot month. Soybean Gulf basis levels, however, jumped 1 to 5 cents versus futures, according to U.S. Department of Agriculture data. Cash grain markets remain strong versus futures prices, but could begin to soften as grain begins to move more freely.
A lack of farmer selling has boosted cash market prices and limited losses in futures throughout the fall. Expectations that prices could go higher and farmers' stable financial positions after a year of sharply higher crop prices have encouraged farmers to hold on to supplies.
In first week December 2011 Cash corn's Chicago Board of Trade futures shrunk to 8 1/2 cents, from 11 1/2 cents at the start of the week, according to a national cash grain index maintained by the Minneapolis Grain Exchange. Cash soybeans' discount to January CBOT futures shrunk 1 1/2 cents during that time period, to 43 1/2 cents.
Global Corn or Maize production may hit a new record of 853 million tons (826 million tons in 2010) in 2011/12 despite the US crop being slightly smaller than last year’s, said International Grains Council (IGC) in a research note. According to IGC, with harvests in North America and Europe entering their final stages, attention is switching to the southern hemisphere, where farmers in Argentina, Brazil and South Africa are set to plant more Maize than in 2010/11.
However, with the total still expected to exceed output, 2011/12 ending stocks are forecast to fall to a five-year low. Trade in the year to June 2012 is forecast to increase by 1% due to strong demand from buyers in parts of Latin America, Asia and North Africa. Due to strong competition from feed-grade Wheat and projected sluggish growth in industrial demand, world use is forecast to increase at a slower than average pace.
November Corn Outlook
Reduced grain crop estimates for some major producers, including for maize in the US, are only partly offset by increases in the Commonwealth of Independent States (CIS) and elsewhere, trimming the global production total for 2011/12 by 3 million tons from October, to 1,816 million tons. This would still represent an increase of 64m. tons over last year, largely due to sizeable recoveries in output in Russia, Ukraine and Kazakhstan.
Despite initial support from US cash markets in early November and a smaller official crop estimate, CME Maize futures in Chicago saw major speculative selling, partly due to increased competition from other exporters but with sentiment considerably dented by worries about the global financial crisis and the collapse of a major brokerage firm.
Corn Market Outlook
Chicago Board of Trade (CBOT) Corn for December delivery fell 0.47 percent to $5.86 per bushel by 0401 GMT. Prices were on track for a 3.9 percent weekly drop, their third straight decline.
Traders have been focusing on demand since the U.S. corn and soybean harvests have ended. Markets are waiting to see whether China will ramp up its purchases of corn with prices slipping below $6 per bushel. The last major purchase of U.S. corn by China was when prices fell below the level.
However, with the total still expected to exceed output, 2011/12 ending stocks are forecast to fall to a five-year low. Trade in the year to June 2012 is forecast to increase by 1% due to strong demand from buyers in parts of Latin America, Asia and North Africa. Due to strong competition from feed-grade Wheat and projected sluggish growth in industrial demand, world use is forecast to increase at a slower than average pace.
November Corn Outlook
Reduced grain crop estimates for some major producers, including for maize in the US, are only partly offset by increases in the Commonwealth of Independent States (CIS) and elsewhere, trimming the global production total for 2011/12 by 3 million tons from October, to 1,816 million tons. This would still represent an increase of 64m. tons over last year, largely due to sizeable recoveries in output in Russia, Ukraine and Kazakhstan.
Despite initial support from US cash markets in early November and a smaller official crop estimate, CME Maize futures in Chicago saw major speculative selling, partly due to increased competition from other exporters but with sentiment considerably dented by worries about the global financial crisis and the collapse of a major brokerage firm.
Corn Market Outlook
Chicago Board of Trade (CBOT) Corn for December delivery fell 0.47 percent to $5.86 per bushel by 0401 GMT. Prices were on track for a 3.9 percent weekly drop, their third straight decline.
Traders have been focusing on demand since the U.S. corn and soybean harvests have ended. Markets are waiting to see whether China will ramp up its purchases of corn with prices slipping below $6 per bushel. The last major purchase of U.S. corn by China was when prices fell below the level.
Commodity corn prices for December 2012 settled at $6.12 a bushel yesterday, while wheat for that month was at $7.505 a bushel. For the most- active contracts with delivery next month, corn was at $6.5325 and wheat was at $6.3875.
Global corn harvests are trailing demand for a third year, says the IGC, which includes more than 50 nations. Stockpiles may slide to 123 million tons this year from 131 million tons the previous year, it said in an Oct. 27 report. Wheat reserves will be 202 million tons, up from 195 million tons, it said.
Investors should buy corn futures that expire in December 2012 and sell wheat for the same month to profit as prices are set to converge, said Ian Bowler, who runs a hedge fund that’s beaten returns in the industry.
While corn’s shrinking stockpiles will boost the grain, global wheat supplies are ample, said Singapore-based Bowler, who helps run the Henderson Agricultural Fund. Investors may capture the spread between those two contracts -- currently about $1.35 a bushel -- as the gap narrows, he said.
His call reflects projections from the London-based International Grains Council, which expects corn reserves to shrink to a five-year low in the year to June 30, while wheat stockpiles climb to the highest in a decade. Any shocks in the corn market may spur shortages, said Bowler, co-manager of the fund with Sydney-based Phil Pyle. Bowler helps managed $160 million and the fund is part of Henderson Global Investors.
“You don’t have a lot of corn and you have a lot of wheat,” said Bowler, who has traded financial derivatives for two decades. The Henderson Agricultural Fund returned almost 27 percent in the first nine months, compared with an average loss of 4.8 percent for commodity hedge funds in the same period, as measured by the Newedge Commodity Trading Index.
Corn for delivery in December next year on the Chicago Board of Trade was $1.385 a bushel cheaper than wheat for the same month at the close yesterday. That’s not far from the 10- year the average of $1.45, according to Bloomberg calculations.
“Over time, that differential should roll and we should end up with the situation when corn and wheat are again trading at close to parity,” said Bowler.
Goldman Sachs Group Inc. (GS) expects wheat to become more expensive than corn, according to its Nov. 2 forecasts for the two commodities in three, six, and 12 months. Wheat may be 25 cents per bushel more costly than corn in three months, 35 cents more expensive in six months and 50 cents more costly in a year, according to the report.
A higher storage rate for wheat in Chicago may discourage index funds from holding long-term positions as the fees “effectively put pressure” on costs, said Bowler.
The maximum storage charge for holders of Chicago wheat shipping certificates rose to about 20 cents a bushel per month from May 18 from about 17 cents, CME Group Inc. (CME), operator of the Chicago Board of Trade, said in April. The highest rate for corn is about 5 cents a bushel, according to CME.
Bowler, who cycles about 50 kilometers (31 miles) on a return trip along Singapore’s east coast every Monday morning, started his career as an options trader on the Sydney Futures Exchange in 1991. He traded his own book for 10 years before joining Sydney-based Attunga Capital Pty Ltd. in 2008.
Henderson Global Investors, the London-based asset manager that oversaw 74.4 billion pounds ($119 billion) as of June 30, completed a takeover of Attunga Agriculture Trading Ltd. in October, said Bowler and Henderson spokesman Richard Acworth. Attunga Agriculture was one of two hedge funds run by Attunga Capital, founded in 2005 by Ian Gibson and partners.
The agricultural fund trades grains, sugar, canola and “a bit” of palm oil, said Bowler. The fund, which can take as much as $500 million, returned 22 percent in 2008, 9 percent in 2009 and 4 percent last year. Pyle, 50, grew up on a dairy farm in Victoria State and together with Bowler handles the fundamental analysis.
Global corn harvests are trailing demand for a third year, says the IGC, which includes more than 50 nations. Stockpiles may slide to 123 million tons this year from 131 million tons the previous year, it said in an Oct. 27 report. Wheat reserves will be 202 million tons, up from 195 million tons, it said.
Investors should buy corn futures that expire in December 2012 and sell wheat for the same month to profit as prices are set to converge, said Ian Bowler, who runs a hedge fund that’s beaten returns in the industry.
While corn’s shrinking stockpiles will boost the grain, global wheat supplies are ample, said Singapore-based Bowler, who helps run the Henderson Agricultural Fund. Investors may capture the spread between those two contracts -- currently about $1.35 a bushel -- as the gap narrows, he said.
His call reflects projections from the London-based International Grains Council, which expects corn reserves to shrink to a five-year low in the year to June 30, while wheat stockpiles climb to the highest in a decade. Any shocks in the corn market may spur shortages, said Bowler, co-manager of the fund with Sydney-based Phil Pyle. Bowler helps managed $160 million and the fund is part of Henderson Global Investors.
“You don’t have a lot of corn and you have a lot of wheat,” said Bowler, who has traded financial derivatives for two decades. The Henderson Agricultural Fund returned almost 27 percent in the first nine months, compared with an average loss of 4.8 percent for commodity hedge funds in the same period, as measured by the Newedge Commodity Trading Index.
Corn for delivery in December next year on the Chicago Board of Trade was $1.385 a bushel cheaper than wheat for the same month at the close yesterday. That’s not far from the 10- year the average of $1.45, according to Bloomberg calculations.
“Over time, that differential should roll and we should end up with the situation when corn and wheat are again trading at close to parity,” said Bowler.
Goldman Sachs Group Inc. (GS) expects wheat to become more expensive than corn, according to its Nov. 2 forecasts for the two commodities in three, six, and 12 months. Wheat may be 25 cents per bushel more costly than corn in three months, 35 cents more expensive in six months and 50 cents more costly in a year, according to the report.
A higher storage rate for wheat in Chicago may discourage index funds from holding long-term positions as the fees “effectively put pressure” on costs, said Bowler.
The maximum storage charge for holders of Chicago wheat shipping certificates rose to about 20 cents a bushel per month from May 18 from about 17 cents, CME Group Inc. (CME), operator of the Chicago Board of Trade, said in April. The highest rate for corn is about 5 cents a bushel, according to CME.
Bowler, who cycles about 50 kilometers (31 miles) on a return trip along Singapore’s east coast every Monday morning, started his career as an options trader on the Sydney Futures Exchange in 1991. He traded his own book for 10 years before joining Sydney-based Attunga Capital Pty Ltd. in 2008.
Henderson Global Investors, the London-based asset manager that oversaw 74.4 billion pounds ($119 billion) as of June 30, completed a takeover of Attunga Agriculture Trading Ltd. in October, said Bowler and Henderson spokesman Richard Acworth. Attunga Agriculture was one of two hedge funds run by Attunga Capital, founded in 2005 by Ian Gibson and partners.
The agricultural fund trades grains, sugar, canola and “a bit” of palm oil, said Bowler. The fund, which can take as much as $500 million, returned 22 percent in 2008, 9 percent in 2009 and 4 percent last year. Pyle, 50, grew up on a dairy farm in Victoria State and together with Bowler handles the fundamental analysis.
Corn fell the most this month and soybeans dropped to the lowest price in almost three weeks as a rally in the dollar eroded prospects for U.S. exports and reduced the investment appeal of commodities.
The dollar advanced against all its major peers after MF Global Holdings Ltd. was suspended from conducting new business with the New York Federal Reserve and the Chicago Mercantile Exchange limited the firm’s customer trading to liquidation only. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.6 percent amid concern European leaders will struggle to contain the region’s debt crisis.
“Concern about erosion of demand is weighing on the markets,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The uncertainty about European debt and the MF Global situation boosted the dollar and shifted the flow of money away from riskier assets.”
Corn futures for December delivery fell 2.2 percent to $6.405 a bushel at 10:36 a.m. on the Chicago Board of Trade. A close at that price would be the biggest decline since Sept. 30. Before today, the grain rose 11 percent this month on speculation that demand would improve.
Soybean futures for November delivery declined 1.4 percent to $12.0825 a bushel, after touching $12.035, the lowest since Oct. 11.
The U.S. is the largest producer and exporter. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.
The dollar advanced against all its major peers after MF Global Holdings Ltd. was suspended from conducting new business with the New York Federal Reserve and the Chicago Mercantile Exchange limited the firm’s customer trading to liquidation only. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.6 percent amid concern European leaders will struggle to contain the region’s debt crisis.
“Concern about erosion of demand is weighing on the markets,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The uncertainty about European debt and the MF Global situation boosted the dollar and shifted the flow of money away from riskier assets.”
Corn futures for December delivery fell 2.2 percent to $6.405 a bushel at 10:36 a.m. on the Chicago Board of Trade. A close at that price would be the biggest decline since Sept. 30. Before today, the grain rose 11 percent this month on speculation that demand would improve.
Soybean futures for November delivery declined 1.4 percent to $12.0825 a bushel, after touching $12.035, the lowest since Oct. 11.
The U.S. is the largest producer and exporter. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.
Corn prices this year reached the highest since touching records in 2008, as rising demand for meat boosted consumption of grain used in livestock feed, and as refining of grain-based fuels increased. While production of both crops will decline this year in the U.S., the world’s largest exporter, output is growing elsewhere.
“With these high prices of corn in the world, people are trying to cut back a little on demand,” Don Roose, the president of U.S.Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “High prices have been the signal for more production, at the same time.”
Corn futures for December delivery dropped 0.7 percent to settle at $6.4075 a bushel on the CBOT, the first drop in three days. The most-active contract earlier reached a two-week high of $6.55, after yesterday jumping the exchange limit of 40 cents. The price has gained 11 percent in the past year.
World corn production in the crop year that began Oct. 1 will be a record 860.09 million tons, up 3.8 percent from a year earlier, the USDA said. The agency boosted its forecast for China’s crop by 2.2 percent to a record 182 million tons, and said Ukraine will harvest 21 million tons, up 76 percent from last year.
“The increased crops in China and Ukraine will deter U.S. exports,” Rich Nelson, the director of research for McHenry, Illinois-based Allendale Inc., said in a telephone interview. “Exports will be weaker, but lower prices may spur some fresh buying.”
U.S. corn exports in the marketing year that began Oct. 1 will fall to 40.64 million tons, down 13 percent from last year and the lowest since 2003, the USDA said today. Wheat exports forecast at 26.54 million tons were below last month’s estimate and 25 percent smaller than last year.
“Corn demand side of the corn balance sheet is understated, Teucrium’s Gilbertie said. “Demand at these prices is more inelastic,” limiting additional losses because margins for meat and fuel producers have improved, Gilbertie
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show. Wheat ranks fourth at $13 billion, behind hay.
December live cattle fell 0.40 cent to $1.2122 a pound; November feeder cattle gained 0.20 cent to $1.4332 a pound; and December lean hogs rose 0.68 cent to 87.45 cents a pound.
“With these high prices of corn in the world, people are trying to cut back a little on demand,” Don Roose, the president of U.S.
Corn futures for December delivery dropped 0.7 percent to settle at $6.4075 a bushel on the CBOT, the first drop in three days. The most-active contract earlier reached a two-week high of $6.55, after yesterday jumping the exchange limit of 40 cents. The price has gained 11 percent in the past year.
World corn production in the crop year that began Oct. 1 will be a record 860.09 million tons, up 3.8 percent from a year earlier, the USDA said. The agency boosted its forecast for China’s crop by 2.2 percent to a record 182 million tons, and said Ukraine will harvest 21 million tons, up 76 percent from last year.
“The increased crops in China and Ukraine will deter U.S. exports,” Rich Nelson, the director of research for McHenry, Illinois-based Allendale Inc., said in a telephone interview. “Exports will be weaker, but lower prices may spur some fresh buying.”
U.S. corn exports in the marketing year that began Oct. 1 will fall to 40.64 million tons, down 13 percent from last year and the lowest since 2003, the USDA said today. Wheat exports forecast at 26.54 million tons were below last month’s estimate and 25 percent smaller than last year.
“Corn demand side of the corn balance sheet is understated, Teucrium’s Gilbertie said. “Demand at these prices is more inelastic,” limiting additional losses because margins for meat and fuel producers have improved, Gilbertie
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show. Wheat ranks fourth at $13 billion, behind hay.
December live cattle fell 0.40 cent to $1.2122 a pound; November feeder cattle gained 0.20 cent to $1.4332 a pound; and December lean hogs rose 0.68 cent to 87.45 cents a pound.
Forecasts last week predicted more rain in Argentina, a major corn and soybean exporter. But the rains appear to be lighter than expected, stoking fears that dry weather will hurt yields in that country, said John Sanow, an analyst with Telvent DTN in Omaha, Neb.
Corn and soybean surpluses are low, so traders are anxious about any disruptions to global supplies. Demand from livestock producers and ethanol refiners has risen faster than farmers' ability to boost yields.
The March soybean contract gained 36.5 cents to settle at $12.33 Monday. March wheat gained 17 cents to $6.4175 a bushel. The March corn contract rose 8.5 cents to end at $6.52.
In other trading, metals prices were mixed.
February gold lost $8.70 to finish at $1,608.10. Silver for March delivery gained 9.9 cents to end at $28.782 an ounce.
March copper dropped 1.9 cents to $3.416 a pound. April platinum rose $21.40 to settle at $1,429.60 an ounce and March palladium gained $3.85 to $617.85 an ounce.
In energy trading, crude oil lost a quarter to settle at $101.31 a barrel. Heating oil rose 0.28 cents to finish at $3.073 per gallon and gasoline futures rose 0.74 cents to end at $2.759 per gallon. Natural gas fell 4.8 cents to finish at $3.05 per 1,000 cubic feet.
., says University of Illinois Agricultural Economist Darrel Good.
“One factor that has contributed to higher prices is adverse weather in parts of Argentina and southern Brazil during a critical phase of crop development. Periods of extremely high temperatures and well below average levels of precipitation in December have threatened both the corn and soybean crops in those areas,” Good says.
The adverse weather followed very favorable weather conditions in November. The weather pattern in those areas has been similar to that of 2008-2009 when corn and soybean production was substantially reduced in Argentina, he says.
“Some beneficial rainfall in the dry areas is expected this week, but the forecast calls for a return of hot, dry weather next week. It is difficult to assess potential corn and soybean production in Argentina and Brazil, but the pattern of production estimates in 2008-2009 might provide some guidance,” he notes.
In early December 2008, the USDA judged 2009 corn production potential in Argentina at 710 million bushels. The final production estimate was nearly 17% smaller at about 590 million bushels, he says.
The 2009 Brazilian corn crop was forecast at 2.1 billion bushels in December 2008, but actual production was nearly 5% less at 2 billion bushels. In early December 2011, the USDA forecasted the 2012 Argentine corn crop at about 1.14 billion bushels, Good says.
If production is eventually reduced by 17%, as it was in 2009, the crop would come in at about 950 million bushels. Similarly, the USDA has projected the 2012 Brazilian corn crop at about 2.4 billion bushels. If production is reduced by 5%, the crop would total about 2.3 billion bushels, he says.
“A 2012 South American corn crop that is 290 million bushels smaller than the current forecast would likely lead to larger U.S. corn exports in both the 2011-2012 and 2012-2013 marketing years,” Good says.
In December 2008, the USDA projected 2008-2009 marketing year U.S. corn exports at 1.8 billion bushels. Exports were 49 million bushels larger than the forecast, equal to about 22% of the reduction in the size of the South American crop from the December 2008 forecast, he says.
“This year, USDA projects U.S. corn exports at 1.6 billion bushels. A 290-million-bushel reduction in the size of the South American crop could boost U.S. exports by as much as 65 million bushels. The increase, however, might be smaller due to the abundance of feed grains and wheat in the rest of the world,” Good says.
Corn and soybean surpluses are low, so traders are anxious about any disruptions to global supplies. Demand from livestock producers and ethanol refiners has risen faster than farmers' ability to boost yields.
The March soybean contract gained 36.5 cents to settle at $12.33 Monday. March wheat gained 17 cents to $6.4175 a bushel. The March corn contract rose 8.5 cents to end at $6.52.
In other trading, metals prices were mixed.
February gold lost $8.70 to finish at $1,608.10. Silver for March delivery gained 9.9 cents to end at $28.782 an ounce.
March copper dropped 1.9 cents to $3.416 a pound. April platinum rose $21.40 to settle at $1,429.60 an ounce and March palladium gained $3.85 to $617.85 an ounce.
In energy trading, crude oil lost a quarter to settle at $101.31 a barrel. Heating oil rose 0.28 cents to finish at $3.073 per gallon and gasoline futures rose 0.74 cents to end at $2.759 per gallon. Natural gas fell 4.8 cents to finish at $3.05 per 1,000 cubic feet.
., says University of Illinois Agricultural Economist Darrel Good.
“One factor that has contributed to higher prices is adverse weather in parts of Argentina and southern Brazil during a critical phase of crop development. Periods of extremely high temperatures and well below average levels of precipitation in December have threatened both the corn and soybean crops in those areas,” Good says.
The adverse weather followed very favorable weather conditions in November. The weather pattern in those areas has been similar to that of 2008-2009 when corn and soybean production was substantially reduced in Argentina, he says.
“Some beneficial rainfall in the dry areas is expected this week, but the forecast calls for a return of hot, dry weather next week. It is difficult to assess potential corn and soybean production in Argentina and Brazil, but the pattern of production estimates in 2008-2009 might provide some guidance,” he notes.
In early December 2008, the USDA judged 2009 corn production potential in Argentina at 710 million bushels. The final production estimate was nearly 17% smaller at about 590 million bushels, he says.
The 2009 Brazilian corn crop was forecast at 2.1 billion bushels in December 2008, but actual production was nearly 5% less at 2 billion bushels. In early December 2011, the USDA forecasted the 2012 Argentine corn crop at about 1.14 billion bushels, Good says.
If production is eventually reduced by 17%, as it was in 2009, the crop would come in at about 950 million bushels. Similarly, the USDA has projected the 2012 Brazilian corn crop at about 2.4 billion bushels. If production is reduced by 5%, the crop would total about 2.3 billion bushels, he says.
“A 2012 South American corn crop that is 290 million bushels smaller than the current forecast would likely lead to larger U.S. corn exports in both the 2011-2012 and 2012-2013 marketing years,” Good says.
In December 2008, the USDA projected 2008-2009 marketing year U.S. corn exports at 1.8 billion bushels. Exports were 49 million bushels larger than the forecast, equal to about 22% of the reduction in the size of the South American crop from the December 2008 forecast, he says.
“This year, USDA projects U.S. corn exports at 1.6 billion bushels. A 290-million-bushel reduction in the size of the South American crop could boost U.S. exports by as much as 65 million bushels. The increase, however, might be smaller due to the abundance of feed grains and wheat in the rest of the world,” Good says.
