Thursday, July 03, 2008
12:14 PM
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Thursday, July 03, 2008
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Grain Marketing Commentary
Thursday, July 3, 2008
Detail analysis of the June 30 USDA Acreage and Quarterly Grain Stocks Reports can be found at the following web sites:
University of Missouri
http://www.fapri.missouri.edu/farmers_corner/CropReportCommentary_Current.pdf
University of Illinois
http://www.farmdoc.uiuc.edu/marketing/weekly/html/063008.html
USDA- Acreage Report
http://usda.mannlib.cornell.edu/usda/current/Acre/Acre-06-30-2008.pdf
USADA – Grain Stocks
http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc-06-30-2008.pdf
Supply and Demand Projections
Corn Supply & Demand Projections for 2008 - 2009
Soybean Supply & Demand Projections for 2008 - 2009
Summary
The biggest surprise in both reports was in corn. Planted acres were increased 1.3 million and harvested acres were left unchanged from the March 30 Planting Intentions Report. This implies that corn acres lost due to flooding is 1.3 million. Some private surveys indicated the acres lost to flooding in the 3 – 4 million acre range. The June 1 corn stocks was 135 million bushels above the traded estimate which implies demand is slowing and the beginning stocks for the 2008-09 corn crop will be increased by at least 100 million bushels in future reports.
Soybean planted acres was 300,000 less than the March report. Based on the harvested acres of 72.1 million, abandoned soybean acres due to the flooding are implied at 1.4 million.
Results
Old crop corn ending stocks should be adequate until the new crop is harvested. This should pressure basis as we move through summer into harvest. For new crop corn, a national average yield of 149 bushels per acre will result in ending stocks below 800 million bushels. To push ending stocks of corn back into the 1.3 – 1.4 billion bushel range, the national yield will need to be above 155 bushels per acre which looks doubtful at this time. The other alternative is a cut in demand which is probably what will happen.
The soybean ending stocks continue to tighten up. At 42 bushels per acre, ending stocks will be at 100 million bushels unless we have a significant cut in demand.
The La Nina weather pattern has weakened to a neutral condition. Private forecasts for the rest of the summer project generally favorable growing conditions for the Eastern Corn Belt, but hotter and dryer for the Western Corn Belt. We could easily have a growing season where corn and soybean yields will range from excellent to very poor.
Technicals
The November soybean futures remain in a strong uptrend spurred by the bullish reports. The 20 day moving average has provided good technical price support since mid-May. Two closes below the 20 day moving average would signal a possible top.
The December corn futures have moved into a sideways trading range between $7.40 and $8.00. A breakout either way could result in a move of 50 cents or more.
Strategies
For the next two months weather will dictate the direction in prices. A prudent strategy to follow is to make several small sales versus a few large sales. For cash sales, make sure you contact your grain elevator to see what pricing opportunities they have available.
Unless yields come in significantly better than expected or a significant cut in demand, ending stocks of corn and soybeans will be very tight going into 2009.
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David Reinbott, reinbottd@missouri.edu Farm Management Specialist Last modified: July 03, 2008 |