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February 2015 Market Analysis

USDA Report & Market Highlights

  • Corn Summary – Ending stocks were reduced 50 mbu on higher ethanol grind and lower feed use. At 1.827 bbu the figure was 10 above the average trade estimate of 1.817. The Argentine crop rose 1 MMT and Ukraine, 1.45 million. Exports will be closely watched with increased competition expected from Argentina and the Ukraine.
  • Soybean Summary – U.S. stocks came in at 385, 17 below the average trade estimate with crush up 15 and exports, 20 higher. The net change to the S AM estimate was zero with Argentina up 1 and Brazil down 1. Non-PRC SBM demand appears to be for real but still looking at a huge increase in global soybean inventories.
  • Wheat Summary – Estimates were in line with expectations with the exception of world carryout for 2014/15, which was higher-than-expected and continues to confirm ample supplies. An increase of 5 million bushels in the U.S. carryout to 692 mbu reflects a 25 mbu reduction in exports that was only partially offset by a 20 mbu decrease in imports. In the absence of any major world crop concerns, momentum seems to favor the downside.

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Grain analyst warns of leaner years ahead for Ontario growers

By Blair Andrews, QMI Agency

The next few years will be leaner when it comes to grain prices, a market analyst for an international feed and grain company warned Thursday at the Chatham-Kent Farm Show.

Bruce Trotter based his sobering outlook on a few factors, including lower growth expectations for China and the ethanol industry.

Trotter, who works in Blenheim as the managing director for the Canadian branch of Dutch-based Cefetra, said the era from 2006 to 2011 was a time of rising land prices and better crop margins driven by bio-fuel mandates and very high growth in China.

But the mandated growth in ethanol and bio-diesel is over, and he described the most recent years as an “ethanol hangover.” Read more

January 2015 Market Analysis

USDA Report & Market Highlights

  • Corn Summary – When the dust cleared, slightly friendly corn report with the USDA taking 2.4 bpa/191 mbu off its yield/production estimate. C/O 121 lower at 1.877 bbu, some 63 mbu below the trade average. SON feed/residual use 190 mbu below implied trade estimate. Implied BOY feed/residual # according to the USDA is about 450 mbu ABOVE LY.
  • Soybean Summary – USDA production estimate very near the trade average; c/o holds steady at 410; WASDE more or less embraces CONAB’s bean figure (95.5 versus 95.9); world stocks to build by over 910 mbu this year if S Am production and global use estimates hold.
  • Wheat Summary – Mixed bag as Dec. 1 stocks were above expectations but new-crop winter wheat acreage was lower than expected. Dec. 1 stocks of 1.525 Bbu implied lower-than-expected feed/residual use during Sept-November, primarily HRW. No change to exports, although sales and shipments continue to lag. Carry-out for all wheat up 33 mbu, with most of that increase seen in HRW (+26 million). New-crop winter wheat seedings were light of expectations. At 29.5 million acres, HRW seedings are forecast to be down 3% or about 1.0 million acres vs. last year. The USDA also projected a 1.0 million acre decline in SRW; 7.5 vs. 8.5, or 12%. Choppy with a focus gradually shifting to new-crop prospects both here and in other Northern Hemisphere production regions (e.g. FSU and EU).

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October 2014 Market Analysis

USDA Report & Market Highlights

  • Corn Summary – A bit of a shock with the USDA coming in a ½ bpa below the trade average on yield and 200 K lower on harvested area. Still carry-out grew 80 million from last month. Higher feed/residual estimate supportable from larger crop; more so as average producer price estimate seems high relative to where the market is and the export outlook doesn’t look THAT promising—note Europe’s corn import demand is 9 MMT SMALLER TY!
  • Soybean Summary – The USDA’s 47.1 bpa yield estimate was a ½ bpa below the trade average and area harvested, 300 K fewer at 83.4 million. Lot of minor tweaking but carry-out is only 25 mbu lower at 450 and estimated ending 14/15 world stocks actually grew by a ½ MMT and are now forecast to be up in excess of 36%. Market is currently trading 8-9 lower and seems justified given the stocks outlook. Still, South America has to plant and grow a crop.
  • Wheat Summary – Slightly supportive on modest reductions in competitor crops and lower world ending stocks. FSU crop size was lowered 630,000 MT vs. September with exports reduced 1.0 MMT. Australia production declined 500,000 MT vs. last month with exports down a like amount. Crop size in Argentina was reduced 300,000 MT with exports also lowered 300,000. The net of these changes was a 25mbu increase in U.S. exports (HRS, +10; SRW, +10; and Durum, +5). Annual export forecast at 925mbu vs. 1176 a year ago. In addition, U.S. feed/residual was boosted 25mbu to 180. U.S. carryout at 654mbu, which was 50 million below the average trade guess. World ending stocks were lowered 3.8 MMT to 192.6, although that’s still up 4% from last year.

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