[Farmmarketnews] Todd Austin Grain Commentary

[Farm Market News - Ontario Commodity Report]

Wednesday 16 February 2011

Commodity
Period
Price  
Weekly Movement

Corn CBOT
Mar. 
6.90 ½ 
↓
7 ½  
cents

Soybeans CBOT
Mar.
13.660
↓
85 
cents

Wheat CBOT
Mar. 
8.370
↓
49 
cents

Wheat Minn.
Mar. 
9.57 ½ 
↓
69 ½    
cents

Wheat Kansas
Mar. 
9.300
↓
58 
cents

 
 
 
 
 
 

Canadian $
Mar. 
1.0143
↑
98
points

 
CORN
The market has been watching USDA ratchet down its projections for carryout of
the 2010 corn crop, and that number dropped to 745 million bushels in the
February Supply Demand Report.  Global supplies are likewise dropping, to an
expected four year low of 122.5 million tonnes.  The short supply in the
pipeline is a concern, in the past livestock could be provided with pasture to
carry them until the new crop of corn was available.  Now the industry has less
flexibility to reduce corn use in September than in the past.
As a result of tightening supply prospects, the battle for U.S. crop acreage
this spring is likely to be more intense than anticipated two or three months
ago.  There is a suggestion that there will be at least a four-way battle
between corn, spring wheat, soybeans, and cotton for cropland.  Prices from now
through mid-May, and weather this spring and summer, will be the deciding
factors in determining the cost and availability of corn and soybeans. 
 
SOYBEANS
 
U.S. and world supplies of soybeans are very tight this marketing year because
of a combination of weather problems in several parts of the world, along with
expanding demand for biofuels.  Much of the growth in demand for U.S. soybeans
is coming from expanded Chinese demand although use of soybean oil for biodiesel
is expected to expand because of the reinstatement of biodiesel tax credits
A production shortfall is expected in Argentina, although soybean production
out of Brazil is expected to be strong.Brazil’s soybean production could reach
as high as 71 million tonnes, an increase from last year's record of 68.7
million tonnes.  Exports of the commodity might increase 13 percent to 33
million tonnes, which also would mark an all-time high.
As demand for soybeans is expected to remain high, strong production levels
from South America will be needed if U.S. soybean acreage does not increase
significantly.  In order to maintain pipeline supplies for 2011, U.S. soybean
harvested acres need to reach 77.5 million acres, or 78.5 million planted acres.
 To rebuild soybean stocks, planted acreage may need to reach 79.5 million
acres. 
 
WHEAT
Wheat started the week independently strong on continued demand from the Middle
East.  Iraq purchased US wheat over the weekend which encouraged the bulls, but
by midweek the markets had turned downward and had given up over 30 cents from
the highs.  Improved weather outlooks in China along with better crop estimates
from Australia and fund profit taking were to blame for the correction. 
Countries hungry for wheat could see this correction as an excellent buying
opportunity to replenish their stocks.
USDA baseline wheat data released early in the week is indicating a smaller US
national yield for 2011, but increased acreage from last year should be enough
to compensate.  Extreme weather and temperature fluctuations this winter have
the trade wondering how much wheat will be ripped up in the spring in the US
Midwest.
Current contract prices for February 16, 2011 at the close are as follows:
SWW at $281.58 per tonne ($7.66 /bu.), SRW at $281.58 per tonne ($7.66 /bu.),
HRW at $296.08 per tonne ($8.06 /bu.), and HRS at $328.44 per tonne ($8.94
/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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