Friday, December 27, 2013
Grain Marketing Commentary
Agriculture Business Specialist
University of Missouri Extension
December 27, 2013
Corn prices continued to be under pressure based on a big U.S. and World crop and the outlook that U. S. ending stocks could easily go over 2.0 billion bushels for the 2014-15 crop year. USDA trimmed ending stocks by 95 million bushels in the December 10 report to 1.79 million bushels; however, world ending stocks are expected to grow to a 13 year high of 162.5 million metric tons (mmt). Corn demand is coming back and may set a record for this marketing year, but ending stocks will not fall much based on a record production this year in the U.S.
After a record corn production in South American in 2012-13, corn production this year is expected to be down 12 mmt and ending stocks down 4 mmt. The drop in production is more of a function of less corn acres in Brazil in favor of more soybean plantings. What needs to be watched closely is the weather in Argentina and southern Brazil. This past week this region has received little rainfall and above average temperatures. If this weather pattern persists for a couple of more weeks, corn production in this region will be reduced.
Other issues pressuring corn prices are Chinese rejections of U.S. corn and DDG’s due to unapproved GMO traits. While there is much that can be said about this, I think the bottom line is the Chinese want to buy corn and DDG’s at a lower price.