Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
June Supply and Demand Highlights
The seasonal rally is expected to resume based upon a favorable June supply and demand report. Bear in mind that the planted acreage estimates for this month’s report are based upon the earlier March 31 Prospective Plantings report. The next planted acreage estimates will not be released until June 30. These estimates should be viewed as very preliminary but headed in the right direction.
Corn Analysis
Due to late planting in the Eastern Corn Belt, USDA lowered the projected yield for ’09 U.S. corn production to 153.4 bushels per acre, a two bushel per acre decline from a month ago. Beginning stocks were unchanged, as were the projection for harvested acres, and imports resulting in a total supply projection of 11.935 billion bushels, 155 million bushels less than the May estimate.
On the demand side of the equation, USDA lowered the estimate for feed use 100 million bushels. All other demand items were left unchanged from last month, now projecting total demand at 12.460 billion bushels.
Ending stocks for U.S. corn for the ’09/’10 marketing year are now projected at 1.090 billion bushels, 50 million bushels less than last month. The season average farm price estimate was increased 20 cents per bushel on both ends of the price range, now estimated at $3.90 to $4.70 per bushel.
World corn ending stock estimates were lowered 3.75 MMT from the May estimate, due primarily to increased demand. World corn ending stocks for the ’09/’10 marketing year are now estimated at 125.46 MMT as compared to 138.54 MMT for the ’08/’09 marketing year and 130.7 MMT for ’07/’08.
Soybean Analysis
The U.S. soybean production estimate was left unchanged from a month ago at 3.195 billion bushels. At this point in time, there were no changes made in planted, harvested acreage, and/or projected yield. Those numbers will be updated in the July supply and demand report. The only change to the supply and demand projections for U.S. soybeans is attributed to the lowering of the beginning stocks number, reduced 20 million bushels from last month. This reduced the total supply projection by 20 million bushels, now placed at 3.317 billion bushels.
Ending stocks for U.S. soybeans for the ’09/’10 marketing year are now estimated at 210 million bushels, 20 million bushels less than last month. The season average farm price was increased on both ends of the price range, now estimated at $9.00 to $11.00 per bushel.
World ending soybean stocks were reduced from last month’s estimate of 51.88 MMT and are now projected at 51.02 MMT. World ending soybean stocks for the ’08/’09 marketing year were 41.85 MMT and 52.92 for the ’07/’08 marketing year.
Wheat Analysis
U.S. wheat production was decreased due to a drop of 2/10th per bushel in the per acre yield estimate for all wheat, placing production at 2.016 billion bushels, down 10 million bushels from a month ago. Imports and beginning stocks were left unchanged, bringing the estimate for total supply in at 2.8 billion bushels.
The demand for feed wheat was reduced 20 million bushels while all other demand items were left unchanged.
Ending stocks for all U.S. wheat are now estimated at 647 million bushels, a 10 million bushel increase from a month ago. The season average farm price is now estimated at $4.90 to $5.90 per bushel, an increase of 20 cents per bushel on both ends of the price range from last month.
World ending wheat stocks were increased slightly from last month, now estimated at 182.65 MMT. World ending wheat stocks are projected to be 14.25 MMT larger than last year and 62.68 MMT larger than the ’07/’08 marketing year.
Marketing Strategy
The summer commodities market will be marked by price volatility. Several factors will contribute to keeping commodity prices bouncing around. First, weather developments will play a major role in the direction that commodity prices take considering the lateness of planting in the Eastern Corn Belt. Commodity traders will be watching crop development throughout the season. Ideal weather would lead to lower prices, while weather problems would obviously lead to higher pricing opportunities. Second, outside market forces e.g., value of the dollar, price of oil, the stock market, and non-commercial fund trading will all have a significant impact on commodity prices as the summer progresses. With the SRW wheat harvest just around the corner and large stockpiles of wheat in the world, new crop SRW wheat could now be on a trek to making a harvest low before resuming more normal pricing patterns.
Technically speaking, resistance for new crop Dec corn futures is now at $4.72, support at $4.33; resistance for new crop Nov soybeans is at $11.77, support at $10.47; and new crop July SRW wheat resistance is at $6.76, support at $5.63. Currently, Dec ’09 corn futures are trading at $4.64; Nov ’09 soybean futures at $10.76; and July ’09 SRW wheat at $6.01 per bushel. For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.