[Farmmarketnews] Todd Austin Grain Commentary

Thu Apr 14 09:40:44 EDT 2011

Wednesday April 13, 2011

Commodity
Period
Price  
Weekly Movement

Corn CBOT
May. 
7.55 ¼   
↓
7 ¾  
cents

Soybeans CBOT
May.
13.36 ½  
↓
40 
cents

Wheat CBOT
May. 
7.52 ¾    
↓
29 ½   
cents

Wheat Minn.
May. 
9.04 
↓
50 ½      
cents

Wheat Kansas
May. 
8.85  
↓
54 ½      
cents

Canadian $
Jun. 
1.0374 
↓
3
points

CORN
Monday afternoon’s first USDA corn planting progress update of the new growing
season showed 3 percent of the U.S. crop had been planted as of Sunday, on par
with a year earlier and with the five-year average pace. The record progress for
early April is 4 percent, which was accomplished in 1999 and 2000. Illinois was
the only major Midwestern corn state where significant planting progress took
place last week, at a pace above their historical average.

In their previous stock update, the USDA left corn ending stocks at a low 675
million bushels. This leaves corn in a delicate position as any shift in
production expectations such a delayed planting could send the futures prices
higher.

It is interesting to note that for a brief time, May corn futures traded above
May wheat in the Chicago Exchange. This inversion has not happened since 1996,
which coincidently was the last time corn stocks were at these low levels.

SOYBEANS
China continues to be the focus of the soybean market. As China is the world
leader in soybean imports, any sign that they may cut these imports puts
pressure on global prices. Due to poor crushing margins in China and falling
soymeal prices, their crushers are operating at lower capacity than in previous
years.

The negative pressure recently felt in the soybean market has lead to
speculation that this will lead to importers and investors bringing money back
into the market.  The recent selloff was triggered more by risk aversion through
the commodity spectrum rather than a change in the fundamental supply-and-demand
balance outlook. 

Production from Brazil, Argentina, Paraguay, Uruguay and Bolivia will reach
132.7 million metric tons this year, 2.8 million tons more than previously
forecast, according to a recent report from Oil World. There is an extremely
large South American crop that is in the process of being harvested. The
remaining import demand is certainly shifting to South American origin.

WHEAT
Commodity values fell sharply the first half of the week after Goldman Sachs
recommended that clients take profits, as signs of “demand destruction” emerge
in crude oil. Crude oil fell more than 3 percent, dragging corn, soybeans, and
wheat with it.

The U.S. winter wheat crop had the lowest government rating in nine years as
dry weather persists in the southern and central Great Plains. About 36 percent
of the crop was good or excellent as of the 10th of April, down from 65 percent
a year earlier.  It should be noted however, that the SRW is generally in much
better shape that the HRW. 

The Bank of Canada kept its benchmark rate at 1 percent, where it has been
since September, and reiterated that further increases would be “carefully
considered.” The Canadian dollar last week reached the strongest since November
2007 on higher commodity prices, which make up 45 percent of our exports.

Current contract prices for April 13, 2011 at the close of the markets are as
follows:
SWW at $250.67 per tonne ($6.82 /bu.), SRW at $252.44 per tonne ($6.87 /bu.),
HRW at $270.14 per tonne ($7.35 /bu.), and HRS at $316.63 per tonne ($8.62
/bu.).

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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