Markets weather-driven — corn, soy, cotton
Oct 16, 2009 10:42 AM, By Ray Nabors, Heartland Ag Network
Weather is driving market prices as cotton, corn and soybean yield estimates and quality potential drops. The freeze in the Corn Belt put an abrupt stop to this growing season. Continuous harvest delays from rain from the Corn Belt to the Delta make yields uncertain. Short-term supplies are tightening as farmers cannot get production from field to market.
September cattle placements increased 3 percent. That is three months in a row of increased cattle on feed. Marketing totals are anticipated to be down 2.7 percent this month. Market cattle use will increase the rest of the year and exceed last year’s use during the first quarter of 2010. Pork bellies in storage are 39.84 million. That is the second highest number since 1970. Feed demand is slowly improving.
Alternative energy use has doubled on farms. Farms using alternative energy sources are up to 11 percent and that percentage is growing rapidly.
Soybeans
Rain continues to delay soybean harvest. Soybean diseases are more common and causing quality issues. A freeze in the western and northern Corn Belt hurt yields as well as quality. Soybean harvest is 23 percent complete compared with the 10-year average of 57 percent.
USDA predictions of 3.25 billion bushels of carryover supply are bearish. That amount of carryover assumes 42.5 bushels per acre average production. Export inspections were 14.7 million bushels and below USDA predictions. Soybean crush was below expectations at 107.4 million bushels.
Brazil estimates another million tons of soybean production next year. China is shifting interest from U.S. beans to South American beans. China has committed to stockpiling domestic soybeans but the lower dollar value makes our soybeans competitive. China bought 110,000 tons of U.S. beans and sold 2,000 tons of stored beans. India has increased vegetable oil imports 32 percent from 5.43 million tons to 7.98 million.
Soybean exports were down last week at 451,000 tons and below market expectations. Soy oil sales are now 25.5 percent above the 10 year average. Higher oil prices are supporting biofuel prices. Demand for bio diesel from soy oil is increasing.
Corn
USDA predictions of 13 billion bushels of corn carryover are not as bearish as the market reaction suggested. Even that large amount is not enough to meet current world demand. Ethanol use exceeds USDA estimates. Weekly export inspections of 20.4 million bushels were less than half USDA predictions.
Corn harvest is late. Only 13 percent of corn is harvested where 38 percent is average. Chinese corn production estimates were lowered another 2.5 million tons after USDA’s 5 million ton decrease.
Exports last week of 522,000 tons were below market anticipation. The flow of corn to market is limited by late maturity and harvest delays. Increased gas prices support higher ethanol prices and increased fuel use stimulates ethanol demand.
Wheat
Wheat stocks are predicted to rise over 800 million bushels. Last week exports reached a bullishly unexpected 767,000 tons. Estimates of wheat import demand from Asia and Africa has declined. Yield estimates of French wheat have dropped 1 million tons.
Winter wheat planting is slightly behind with 64 percent planted and 70 percent normal. Export inspections of 78 million bushels met market anticipations.
Australian production may hit a new record at 4.8 million tons. Ukraine production of 43 million tons is down 10 million tons from last year. Algeria is shopping for 50,000 tons. Exports from the UK are up 30 percent this year. Russian exports are down 660,000 tons. Canada has only harvested 75 percent of their wheat.
Rice
Harvest delays are supporting rice market prices despite excellent yields. Late planted rice yield is not yet determined. Yields and quality concerns regarding United States rice are becoming a market factor. USDA reports are price bearish. Yields estimates increased and so did carryover supply estimates.
Large Asian rice supplies remain a bearish market factor. Iraq bought lower priced Asian rice last week. The spread between Thailand prices and Vietnamese prices is $100 per ton. Export sales increased slightly but shipments were lower
Cotton
Continued rain delays cotton harvest exacerbating concerns over future tight supply. Weekly export sales are slow but increasing. Last week exports were 63,000 bales up from 60,000 the week before. Signs of increased textile demand worldwide are supporting cotton prices. The Indian government anticipates economic improvement. Stock markets have increased in value worldwide as well. Yield estimates dropped 200,000 bales. Cotton fundamentals are more bullish.
Production potential could be declining and quality is definitely reduced as rains and disease damage open bolls. Harvest is only 12 percent complete compared to the average of 33 percent. This is a new record for slow harvest.
e-mail: heartland.agriculture@yahoo.com
