[Farmmarketnews] Weekly Seamus Hoban GFO Grain Commentary

[Farm Market News - Ontario Commodity Report]

Wednesday, December 15, 2010

Commodity
Period
Price  
Weekly Movement

Corn CBOT
Mar. 
5.8425
↑
9 3/4
cents

Soybeans CBOT
Jan.
12.9650
↓
8 1/2
cents

Wheat CBOT
Mar. 
7.6475
↓
19 1/4
cents

Wheat Minn.
Mar. 
8.4275
↓
20    
cents

Wheat Kansas
Mar. 
8.1500
↓
22 1/2
cents

 
 
 
 
 
 

Canadian $
Mar. 
0.9942
↑
10
points

 
 
CORN
Corn futures finished slightly higher for the week as US ethanol production
continues to run above USDA estimates. 
 
This Friday’s Informa report will give the market a clearer idea of 2011
acreage. Their last report estimated US planted acreage at 93.1 million compared
with estimates from the USDA (88.2 million) and FC Stone (90.3 million).
Combined US corn and soybean plantings must expand an unprecedented 7 to 9
million acres to satisfy demand in both markets next year. The market is
generally resigned to the fact that this target will not be met, however it
remains to be seen how the shortfall will be divided among the two crops.  
 
The US faces an extremely tight S&D situation this year and again next. The
trade fears dramatic old crop tightness with ending stocks at or below minimum
pipeline levels. The trade will be looking for USDA to increase corn use for
ethanol estimates in subsequent monthly S&D updates. 
 
Funds continue to hold a record 440,000 contract long position in corn
futures.
 
SOYBEANS
Soybean futures lost some ground this week. US soybean exports to China remain
strong, however Chinese crush margins are under pressure as the government
attempts to cap vegetable oil prices in response to broad concerns about food
price hikes. It remains to be seen how effective the price caps will be, as
world vegetable oil prices continue to move higher despite the intervention.
This will put pressure on the Chinese Government to raise price limits.  
 
Informa will estimate new crop soy acreage on Friday morning. Informa’s
November estimate was 75.8 million however the December estimate is based on
grower surveys and will therefore be significantly different. Informa will also
estimate 2010 final production; their November estimate was a significant 50
million bushels above USDA’s November forecast. If this discrepancy remains,
concerns about old crop tightness will be tempered slightly. 
 
The trade is noting much improved US soyoil and soymeal yield in recent crush
statistics. Oil yield was up 4% from a year ago with meal yield up 1.7%. Still
private analysts continue to project an annual crush exceeding current USDA
forecast to further tighten stocks. 
 
 
 
WHEAT
Wheat futures continued to drift lower this week. The trade is receiving mixed
messages about the harvest situation in Australia, with additional rain
forecasted however increased harvest activity in some areas. Meanwhile the
Australian Government forecaster remains confident that the bumper crop will be
harvested. This week it surprised the market by projecting 2010/11 wheat exports
at 16.6m tonnes, amazingly up 21% from last year. 
 
Meanwhile record high temperatures were reported in parts of Texas during the
week, 20 to 25 degrees above normal with drought conditions expected to continue
through next week. 
 
US wheat exports have been strong in recent weeks with Egypt and Jordan making
large purchases. However traders still remain concerned that overall US export
pace is inadequate to reach the USDA’s annual forecast, with some looking for
the USDA to lower export forecast in upcoming S&D reports. 
 
Contract prices for December 15th, 2010 at the close are as follows:
SWWat $254.87 per tonne ($6.94/bu.), SRW at $256.71 per tonne ($6.99/bu.), HRW
at $275.19 per tonne ($7.49/bu.), and HRS at $279.99 per tonne ($7.62/bu.).
 
Chart of the Week
 
 

 

John Jordan
Editor, AgriLink and Farm Market News
University of Guelph, Ridgetown Campus
Tel. 519-674-1500 x 63577

Fax. 519-674-1530
E-mail: jjordan at ridgetownc.uoguelph.ca 
AgriLink website : www.ridgetownc.com/agrilink 

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