Corn Futures, Dollar, Corn Inventory
Corn futures dropped again as the stronger U.S. dollar made investments and exports unattractive, and the significant global corn inventory has left no base to work from.
As with wheat, as mentioned in my last post, when the prices of grains surged in 2008, farmers seeded huge amounts of wheat, corn, soybeans and rice, which all but assured there would be downward pressure on grain prices in the years ahead.
I'm not sure why the farmers continue to do this, or if they're being told wrongly, but farmers need to understand that if they put huge seedings of crops in the year after a big price increase, they can be sure huge numbers of farmers around the world will do the same.
While there is always the possibility of weather having a devastating impact on some crops, as last year showed, there was so much grain on the market that even when their were droughts or other weather problems, there was so much available it didn't have much of an impact.
With corn this is the story, and will continue to be a bearish story until some farmers drop planting it based on past performance.
Eventually there will be major demand around the world for food, but we are far from that with grains at this time, even though analysts and wealthy investors like Jim Rogers tout food and agriculture in general as a great future investment.
It will be all of that, but when farmers plant far more than global demand warrants, we're always going see downward pressure on corn futures and other grains until it corrects itself.
Corn Futures, Dollar, Corn Inventory
Showing posts with label Corn Correction. Show all posts
Showing posts with label Corn Correction. Show all posts
Tuesday, March 2, 2010
Monday, November 10, 2008
DJ USDA Report: Corn To Find Competition From Wheat Feeding
CHICAGO, Nov 10, 2008 (Dow Jones Commodities News via Comtex) -- U.S. corn exports will face tough competition from ample world wheat supplies, but demand for U.S. soybeans should stave off any price slumps in that market, analysts said following new government crop data released Monday.
Issued less than a week after the U.S. Department of Agriculture revised its October crop production report, the November report offered "very little new information," said Gavin Maguire, an EHedger analyst in a post-report conference call sponsored by the CME Group.
The USDA slightly cut corn and soybean production estimates.
Corn export forecasts were "less-than-desired and there is world wheat feed competition; there's plenty of wheat around in world," said Jack Scoville of Price Futures Group. "Wheat prices will struggle to do much very interesting."
The USDA expects farmers to harvest 12.020 billion bushels of corn on a yield of 153.8 bushels per acre. This undercuts the October USDA estimate of 12.033 billion on a 153.9 bushel-per-acre yield. Monday's data also fell below the average trade estimate of 12.066 billion bushels on a 154.3-bushel-per-acre yield.
Output for 2007 was 13.074 billion.
U.S. export estimates were cut 50 million bushels to 1.900 billion from the October report.
The USDA estimated the U.S. soybean crop at 2.921 billion bushels on a 39.3 bushel/acre yield. This is greater than the average trade estimate of 2.916 billion bushels on a 39.2 bushel/acre yield. But the USDA estimates was down from the October forecast of 2.938 billion bushels and yield of 39.5 bushels/acre. Output for 2007 was 2.676 billion and the average yield was 41.7.
"Production is slightly friendly; ending stocks are not," Scoville said.
Ending stocks for the 2008-09corn marketing year were pegged at 1.124 billion bushels, below the 1.160-billion-bushel trade estimate and above than 1.088 billion October estimate.
The ending stocks forecast for the 2008-09 soybean marketing year was 205 million bushels, above the 189 million-bushel-average trade estimate and equal to the October figure.
The ending stocks forecast for the 2008-09 wheat marketing year was 603 million bushels, above the 594 million-bushel-average trade estimate and the USDA's 601-million-bushel October figure.
"I feel that strength will be sold into," Maguire said, for corn and soybeans. "We're in a range where we'll test upper limits near recent highs and encounter pretty decent selling pressure."
If any market will press higher into the new year, it will be soybeans, he said, noting U.S. farmers will be closely watching Brazil's weather to watch for problems that could signal the need for greater plantings.
Maguire also said he thought the economics of winter wheat-soybean planting was more attractive than corn.
"I think we're trying to put a seasonal bottom in now for corn," Scoville said, marking his bearish range low around $3.75 or $3.50, even though he'd heard lower.
When planting season rolls around Scoville said he thinks corn could head to $5.
"Beans are probably the leader to the upside," he said, saying he could see them "with good luck" rising back to $11.50-11.75 areas. "I think we're at lower end of bean trading range for now. Wheat, once again we're at the lower end of the trading range."
Maguire added that soft red winter wheat has "the most downside room; some of better classes can hold in a bit more strongly."
While Argentina's projected wheat output was cut in Monday's report by 1 million metric tons to 11 million, the world's overall production rose.
Regarding soybean yield estimates, Scoville said the USDA should "have a pretty good handle, but yields have been pretty uneven, at least to reports I've been hearing, and uneven reports leads to uneven data calculations."
-By Rebecca Townsend, Dow Jones Newswires; 312-750-4118; rebecca.townsend@dowjones.com
Issued less than a week after the U.S. Department of Agriculture revised its October crop production report, the November report offered "very little new information," said Gavin Maguire, an EHedger analyst in a post-report conference call sponsored by the CME Group.
The USDA slightly cut corn and soybean production estimates.
Corn export forecasts were "less-than-desired and there is world wheat feed competition; there's plenty of wheat around in world," said Jack Scoville of Price Futures Group. "Wheat prices will struggle to do much very interesting."
The USDA expects farmers to harvest 12.020 billion bushels of corn on a yield of 153.8 bushels per acre. This undercuts the October USDA estimate of 12.033 billion on a 153.9 bushel-per-acre yield. Monday's data also fell below the average trade estimate of 12.066 billion bushels on a 154.3-bushel-per-acre yield.
Output for 2007 was 13.074 billion.
U.S. export estimates were cut 50 million bushels to 1.900 billion from the October report.
The USDA estimated the U.S. soybean crop at 2.921 billion bushels on a 39.3 bushel/acre yield. This is greater than the average trade estimate of 2.916 billion bushels on a 39.2 bushel/acre yield. But the USDA estimates was down from the October forecast of 2.938 billion bushels and yield of 39.5 bushels/acre. Output for 2007 was 2.676 billion and the average yield was 41.7.
"Production is slightly friendly; ending stocks are not," Scoville said.
Ending stocks for the 2008-09corn marketing year were pegged at 1.124 billion bushels, below the 1.160-billion-bushel trade estimate and above than 1.088 billion October estimate.
The ending stocks forecast for the 2008-09 soybean marketing year was 205 million bushels, above the 189 million-bushel-average trade estimate and equal to the October figure.
The ending stocks forecast for the 2008-09 wheat marketing year was 603 million bushels, above the 594 million-bushel-average trade estimate and the USDA's 601-million-bushel October figure.
"I feel that strength will be sold into," Maguire said, for corn and soybeans. "We're in a range where we'll test upper limits near recent highs and encounter pretty decent selling pressure."
If any market will press higher into the new year, it will be soybeans, he said, noting U.S. farmers will be closely watching Brazil's weather to watch for problems that could signal the need for greater plantings.
Maguire also said he thought the economics of winter wheat-soybean planting was more attractive than corn.
"I think we're trying to put a seasonal bottom in now for corn," Scoville said, marking his bearish range low around $3.75 or $3.50, even though he'd heard lower.
When planting season rolls around Scoville said he thinks corn could head to $5.
"Beans are probably the leader to the upside," he said, saying he could see them "with good luck" rising back to $11.50-11.75 areas. "I think we're at lower end of bean trading range for now. Wheat, once again we're at the lower end of the trading range."
Maguire added that soft red winter wheat has "the most downside room; some of better classes can hold in a bit more strongly."
While Argentina's projected wheat output was cut in Monday's report by 1 million metric tons to 11 million, the world's overall production rose.
Regarding soybean yield estimates, Scoville said the USDA should "have a pretty good handle, but yields have been pretty uneven, at least to reports I've been hearing, and uneven reports leads to uneven data calculations."
-By Rebecca Townsend, Dow Jones Newswires; 312-750-4118; rebecca.townsend@dowjones.com
Tuesday, October 28, 2008
Commodities: USDA MIsses Big on Corn Estimate
USDA misses big on acres planted in corn
It's hard to believe, but the U.S. Department of Agriculture missed the number of acres planted in corn this year by 1 million less than asserted on October 10.
That will bring the number of expected bushels down by 167 million from the last report.
Consequently, that could be good news for farmers, who can now expect about 5 cents more a bushel than thought, coming in at between $4.35 to $5.35 a bushel going ahead.
The USDA hasn't done too well this year in its corn estimates and other grain estimates as well.
It's hard to believe, but the U.S. Department of Agriculture missed the number of acres planted in corn this year by 1 million less than asserted on October 10.
That will bring the number of expected bushels down by 167 million from the last report.
Consequently, that could be good news for farmers, who can now expect about 5 cents more a bushel than thought, coming in at between $4.35 to $5.35 a bushel going ahead.
The USDA hasn't done too well this year in its corn estimates and other grain estimates as well.
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