Grain Marketing Highlights – April 29, 2011

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

USDA Export Sales Report 4/28
Pre-report estimates for weekly export sales of soybeans ranged from 9.2 to 22 million bushels. The weekly report showed total export sales (old and new crop) of 7.3 million bushels, with old crop sales of 5.3 million bushels. This was above the 4.3 million bushels needed to stay on pace with USDA’s demand projection of 1.59 billion bushels. Total shipments reported at 9.9 million bushels were below the 13.6 million bushels needed this week. The report is considered bearish.

Pre-report estimates for weekly corn export sales were from 23.6 to 47.2 million bushels. Old and new crop export sales were reported at 17.2 million bushels, with old crop sales accounting for 13.7 million bushels. This is below the 18 million bushels needed this week to stay on pace with USDA’s demand projection of 1.95 billion bushels. Total shipments of 35.7 million bushels were below the 43.4 million bushels needed this week. The report is considered bearish.

Pre-report estimates for weekly wheat export sales ranged between 7.3 and 20.2 million bushels. Combined sales of old crop and new crop were reported at 15.6 million bushels, with old crop sales representing 9.7 million bushels of the total. This is above the 1.7 million bushels needed this week to keep pace with USDA’s demand projection of 1.275 billion bushels. Shipments of 30.4 million bushels were below the 42.3 million bushels needed this week. This report is considered bearish.

IGC Widens 2011-12 Grain Deficit Projection Despite Output Rise
The International Grains Council more than tripled its estimate for a world shortfall in grain supplies next season even though it upped its forecast for world production. Global grain production in 2011-12 is forecast to rise 4.5% to 1.808 billion metric tons due to a recovery in output from the European Union and Argentina. World corn output is expected to rise almost 5% on the year in 2011-12 to a record 847 million tons, while wheat production is pegged at 672 million tons–22 million tons higher than the current season. Despite the growth in world output, the IGC said it expects consumption to outpace demand by 10 million tons, more than three times as much as its previous forecast of 3 million tons.

Even though consumption growth is expected to fall to 1.5% as industrial use of grain slows, stocks are expected to hit a four-year low of 334 million tons, equivalent to 18.4% of demand, compared with 23% two seasons ago. “With consumption of grains forecast to remain higher than production, a further downturn in world carryover stocks is likely,” the IGC said.

Corn markets are particularly tight, with total supplies expected to fall by 0.8% this year, the first year-on-year decline since 2002-03. Inventories are expected to fall even further next season, with carryover stocks expected to decline 8 million tons from this season’s low levels to 111 million tons. The reduction in stocks comes despite a forecast slowdown in corn demand next year. “Potentially tight supplies and firm market prices are expected to limit corn consumption growth to 1.3%,” the IGC said.

Market Strategy
U.S. corn planting was reported to be 9% complete on April 24 compared to 46% last year and the five year average of 23 %. Spring wheat plantings were reported to be 6% complete compared to 39 % last year and the five year average of 25%. Winter wheat condition was reported as 35 % good to excellent as compared to 69% last year and 36% last week. The 2011 U.S. planting pace, described as slow up to this point, will likely now become considered as delayed. This could eventually result in some of the acres intended for corn to be planted to soybeans. It could also result in reducing the possibility of producing a trend line U.S. corn yield. U.S. corn production would then have even less room for margin of error during the growing season.

The U.S. dollar index continues to show weakness with the nearby now trading at 73.120, reflecting about an 8 point drop since January 2011. The delayed planting pace and the weaker dollar should result in additional non-commercial buying of commodities which would be expected to bolster prices from current levels, with one caveat, the trade will be keeping an eye out for any sign of demand destruction. Currently, Dec ‘11 corn futures are trading at $6.55; Nov ‘11 soybeans at $13.75; and July ‘11 SRW wheat at $7.87 per bushel.

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

 

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