Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
World Corn Output Predicted to Fall; Stocks to Decline
Global corn production is expected to decline 2% in the ’08/’09 marketing year to 771 million metric tons due to flooding in the U.S. Corn Belt and frost in Brazil, according to Rabobank. World corn production is expected to lag demand by about 9%, leading to a corresponding reduction in year on year world corn stocks that will plunge them to the lowest level in 35 years. Current high prices for corn are expected to continue due to the need to ration demand. A downside to the positive price outlook that this scenario presents is that it will also lead to some demand destruction in the process of making adjustments. Hardest hit is likely to be the livestock and ethanol industries.
World Soybean Output to Rise; Stocks to Decline
Global production of soybeans is predicted to rise 9% in the ’08/’09 marketing year to 238 mmt. However, despite an expected rise in production, low carryover stocks and an expected 2.2% consumption growth, soybean stocks are expected to erode in the ’08/’09 marketing year.
China’s consumer price inflation rate was 8.1% in the first five months of this year. China is partly sheltered from global grain-price increases because it is largely self-sufficient in grains.
Marketing Strategy
After a slow start to yesterday’s trading corn, soybeans, and wheat surged higher on the day. Dec ’08 corn futures closed at $7.80 per bushel; Nov ’08 soybean futures closed at $16.30 per bushel; July ’08 SRW wheat closed at $8.65 per bushel and Dec ’08 SRW wheat at $9.03 per bushel. Leading the way to the higher close for commodities was the energy market with nearby crude closing at $143.57 per bushel. The nearby U.S. dollar index closed at 72.405. Trading is expected to be lighter and softer in today’s trading due to the holiday weekend and lower overnight closes. Predictions of adverse growing conditions (either to much rain or too hot and dry) are kicking in the afterburners of this weather. Combine the weather market with run away energy prices and the low value of the dollar and we are once again redefining the meaning of price volatility. USDA’s next supply and demand report will be released on Friday, July 11th. For technical assistance on grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.