Grain Marketing Highlights

Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu

2010 U.S. Corn Planting Gets Underway; Time to do Some ‘Strategic’ Planning
The beginning of every cropping season should include some forward thinking as related to forming marketing strategies. This is necessary due to the fact that we are making grain and oilseed sales decisions based upon the use of a futures market. Toward that end, the grain seller needs to establish some benchmarks as to where we are and where we might be going. Monday marked the first issuance of the weekly crop progress report for the 2010 row crop growing season. In that report we got our first look at U.S. corn planting progress for the 2010 crop year. The eighteen states that planted 92% of last year’s corn crop were 3% planted as of April 11, 1% behind last year. Early reports indicate that we are likely to see the pace of planting progress ratchet up considerably next week. Here is where the forward thinking (some might call market planning) comes in, partly based upon the idea that getting this year’s corn crop in the ground doesn’t look to be a problem. U. S. farmers are expected to plant 88.8 million acres of corn which would result in roughly 78 million acres harvested. Assuming a yield of 160 bushels per acre equates to an estimated production of near 12.5 billion bushels. With carry-in estimated at 1.899 billion bushels and imports at 10 million bushels gives a total supply of approximately 14.49 billion bushels for the ‘10/‘11 marketing year. With total use projections estimated at 12.9 to 13.0 billion bushels, ending stocks for the next marketing year begin to draw down from the estimate for the current (‘09/‘10) marketing year, projecting at 1.49 to 1.59 billion bushels. Of course these are to be considered preliminary, rough estimates. However, for the moment these numbers suggest holding up on getting more aggressive in making new crop 2010 corn sales. Further, world use of corn is projected to be record larger for ‘09/‘10 at 31.88 billion bushels while world ending stocks projected at 140.15 MMT are smaller than last year’s 146.40 MMT. On May 11 USDA will release their next monthly supply/demand report. We will be watching the ‘09/‘10 carry out (ending stocks) projections for U.S. and world corn very closely.

CME Group Announces Launch of Distillers’ Dried Grain Contracts
In February, CME Group announced the launch of Distillers’ Dried Grain agricultural commodity futures contracts scheduled to begin trading next week on April 26. Distillers’ Dried Grains, a by-product of corn produced ethanol, is used for animal feed, including livestock and dairy cows. The electronically traded and physically delivered futures contracts can be used by livestock and ethanol producers, commercial corn interests and others to lock in the price of feed or to hedge their ethanol refining margin in combination with corn, natural gas, and ethanol futures. Each Distiller Dried Grain Contract is equivalent to 100 short tons of Distillers’ Dried Grains. Deliverable grades must include a minimum of 26% protein, 8% fat, 12% fiber, and 11.5% moisture content. For more information on Distillers’ Dried Grain futures go to www.cmegroup.com/ddg.

Market Strategy
The spreads in the respective futures contracts indicate that things may be turning more bearish for soybeans and wheat with the corn spreads indicating a more neutral situation, another indication to hold up on making new crop corn sales. Currently, Dec ‘10 corn futures are trading at $3.90 per bushel; Nov ‘10 soybeans at $9.45 per bushel; with July ‘10 SRW wheat futures trading at $4.88 per bushel.

For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.

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