Corn & Seed/Oil Commodities

[Mustang Sally Farm]

Barley Adapts to Climate Change
25 January 2012



SPAIN - The upsurge in droughts is one of the main consequences of climate change, and affects crops in particular. However, Anabel Robredo, a biologist at the University of the Basque Country (UPV/EHU), has confirmed that in the case of barley at least, climate change itself is providing it with self-defence mechanisms to tackle a lack of water.

Climate change is in fact also responsible for a considerable increase in the concentration of CO2, a gas that, paradoxically, is providing this plant with certain characteristics enabling it to offset the effects of drought.
 
Her thesis is entitled Mecanismos fisiológicos de respuesta de la cebada al impacto de la sequia y el elevado CO2: adaptación al cambio climático (Physiological Response Mechanisms of Barley to the impact of drought and elevated CO2: adaptation to climate change). Various international publications have also echoed this research, the most recent being Environmental and Experimental Botany.
 
Ms Robredo has analysed the effect that takes place in the barley as a result of the combination of two of the main consequences brought to us by climate change: the enriching of CO2 and drought. As the researcher explains, “the atmospheric concentration of this gas has increased considerably within the last few decades, and it is expected to increase much more. So we compared barley plants that grow in a CO2 concentration equal to the current (ambient) one with others cultivated in double the concentration, which is what we are expected to reach by the end of this century."

The study was carried out through a progressive imposition of drought so it also determined the capacity of these plants to recover following the lack of irrigation, in an ambient CO2 concentration as well as in the one expected for the future.

[Mustang Sally Farm]

CME: Corn Futures Closed Higher Tuesday
25 January 2012


US - March Corn finished up 10 1/4 at 630 1/4, 5 3/4 off the high and 15 3/4 up from the low. May Corn closed up 9 1/2 at 635 1/4. This was 14 3/4 up from the low and 5 1/4 off the high.

March corn closed sharply higher on the session and has now rallied as much as 43 1/2 cents from last week's lows. Rumors that Russia would tax exports supported wheat and rumors that Argentina may ban exports supported the corn rally but neither rumor could be confirmed.
 
However, near panic buying in the cash corn market in the Midwest and at the gulf for export has helped to support futures as the cash premiums have not been seen in many years. Bearish weather news from Argentina and a negative tone for outside market forces helped to pressure the market early.
 
However, speculative buying emerged to provide support with talk that the cash market is strong enough to keep buyers active on minor set-backs. Exporters who have booked recent deals to Mexico and others are finding it difficult to buy the corn in the cash market due to slow producer selling and surging basis levels.
 
Funds have been noted buyers on the session and the rally has pushed the market to the highest level since January 12th, the day of the bearish USDA updates on production and stocks. Open interest was up 7,949 contracts on the strong rally yesterday. March Rice finished down 0.065 at 14.615, 0.045 off the high and 0.085 up from the low.
 
Wheat Futures Closed Higher
 
March Wheat finished up 13 3/4 at 633 1/2, 4 1/2 off the high and 19 1/2 up from the low. July Wheat closed up 12 at 666 1/4. This was 17 1/4 up from the low and 1 1/4 off the high.
 
March wheat closed sharply higher on the session as rumors that Russia would impose a tax on exports to ensure wheat supply at home helped to spark some buying and short-covering. Weakness in the other grains and a negative tilt to outside market forces helped to pressure the market early.
 
However, a turn up in corn and talk that US wheat is now competitive on the world market helped spark some speculative buying early. The move back over yesterday's highs sparked aggressive short-covering and activated stops to drive the market sharply higher into the mid-session. The rally pushed the market to the highest level since January 12th. Talk of a record net short position from speculators added to the positive tone. March Oats closed down 1 at 294 1/2. This was 2 1/2 up from the low and 4 off the high.
 
Soybean Futures Closed Higher
 
March Soybeans finished up 2 1/2 at 1220, 9 1/2 off the high and 16 1/4 up from the low. May Soybeans closed up 3 1/4 at 1228 3/4. This was 16 3/4 up from the low and 9 1/4 off the high.

March Soymeal closed up 2.5 at 323.5. This was 5.3 up from the low and 3.8 off the high. March Soybean Oil finished down 0.07 at 51.35, 0.24 off the high and 0.35 up from the low. March soybeans closed slightly higher on the session as the market shook off early sharp selling pressures to turn higher with the help of strength in corn and wheat.
 
Rumors that Russia would tax exports supported wheat and rumors that Argentina may ban exports supported the corn rally and soybeans followed the other grains higher. A negative tilt to outside markets plus news that parts of Argentina received heavy rains in the last 24 hours helped to drive the market lower early in the session.
 
Sharply higher trade for corn and wheat helped drag the market back up near unchanged on the day into the mid-session. Traders indicated that drier parts of Santa Fe and Cordoba Argentina received 1 1/2 to 2 1/2 inches of rain in the last day and that this rain may go a long way in helping to boost crop conditions. In addition, the 6-10 day forecast was seen as "wetter" and this added to the negative tone overnight. Open interest was down 3,971 contracts on the strong rally yesterday.

[Mustang Sally Farm]

World Corn Trade, US Corn Exports Boosted This Month
24 January 2012


GLOBAL - Global corn trade forecast for 2011/12 is increased 0.7 million tons this month to 94.7 million. China's imports are projected to reach 4.0 million tons, up 1.0 million based on US export shipments and sales.

As of 5 January 2012, US Export Sales reported local marketing year shipments of 2.1 million tons and outstanding sales to China of 1.2 million. Moreover there remain 1.9 million tons of outstanding sales to "unknown" destinations, and often sales to China have been switched from the "unknown" to China as they are shipped. Other changes to projected 2011/12 imports include: a small increase in imports by South Africa as stocks have become tight ahead of harvest; a reduction of 0.4 million tons to 1.6 million for imports by Syria, caused by political turmoil, financial, and logistical problems; and 0.1 million tons trimmed from Taiwan’s imports based on the slow pace of recent purchases.


US corn exports by month
 

Argentina’s 2011/12 trade year (October-September) corn exports are reduced 1.0 million tons this month to 17.5 million as a sharp reduction in production limits export potential. However, this is more than offset by increases for the United States, Russia, and Paraguay. Russia’s forecast corn exports are increased 0.4 million tons to 1.0 million based on the pace of recent shipments and the larger crop. Paraguay’s corn export prospects are increased 0.3 million tons to 1.8 million based on strong shipments during the last months of 2011.

US 2011/12 corn exports are projected to reach 42.0 million tons, up 1.0 million this month (up 50 million bushels to 1.65 billion bushels for the September-August local marketing year). Based on Census and grain inspections data, US corn exports for October through December 2011 were above levels a year ago. However, as of 5 January 2012, outstanding export sales reached 10.5 million tons, down 11 per cent from a year ago. The increased export forecast is still down 7 per cent from a year earlier, reflecting the expected slowdown in shipments in future months presaged by the level of outstanding sales.

US 2011/12 sorghum exports are projected down 0.25 million tons this month to 1.65 million (down 10 million bushels to 60 million for the local marketing year). A sharp cut in estimated production is limiting exports. The slow pace of sales and shipments confirms that little US sorghum is available for export. Shipment data for October through December 2011 are less than half the previous year’s levels. As of 5 January 2012, outstanding sorghum sales were only 101,200 tons, down 86 per cent from a year earlier. The reduction in US exports is reflected in lower expected imports by Mexico.

Global barley trade is increased marginally this month to 16.3 million tons due to an increase for Argentina. Argentina’s barley exports are raised of 0.2 million tons to 2.4 million as the recent sales pace has been strong. Uruguay’s imports are increased slightly.

[Mustang Sally Farm]

Thursday, February 02, 2012
China Vows Enhanced Agricultural Investment
CHINA - China's central authorities on Wednesday said the nation will continue to step up investment and subsidies for agriculture this year in order to stabilize grain production.


A document publicized Wednesday by the Central Committee of the Communist Party of China (CPC) and the State Council, or China's cabinet, said that the country will continue to expand its fiscal budget for agriculture in 2012 and direct more of the country's fixed-asset investment toward the sector.

The document also said the country will boost investment in agricultural science and technology. It said the government should play a leading role in investment for agricultural science and ensure that the investment will create "significantly" faster growth compared to fiscal revenues.

The country will also offer more subsidies for major grain-producing areas and farming cooperatives, with direct subsidies for farmers to be increased, the document said.

It said the country would further improve the output capacity of China's 800 major grain-producing counties and support the building of production bases for vegetables, cotton, edible oil crops, and sugar.

Government data showed China's grain output rose to a record high of 571.21 million tons in 2011. The figure represented a year-on-year increase of 4.5 percent and marked the eighth consecutive year of growth for the country's grain output.

However, the document warned the Party should remain clear-minded despite the achievements as the current severe and complicated situation of the world economy and the impact of climate change pose risks and uncertainties to the nation's agricultural development.

Meanwhile, the shortage of arable land and fresh water present challenges to the sector, the document said.

According to the government paper, efforts will be further made to stabilize the raising of live pigs, as a scarcity of pork last year pushed up inflation.

The country will encourage banks to step up lending to the rural regions and support commercial banks to set up township outlets. It will continue to support micro-credit businesses to farmers while encouraging banks and rural credit cooperatives to extend more credit to small and micro-sized firms in the counties.

[Mustang Sally Farm]

Friday, February 03, 2012
NCBA Cattlefax: Hope for Strong 2012 Corn Harvest
US - There is a strong need for a successful 2012 corn harvest, as the US competes on global markets. Meanwhile global demand for ethanol is pushing US corn usage up, said the CattleFax team at the NCBA Convention and Trade Show. Charlotte Johnston, editor reports.

The range bound for monthly projected stock-to-use levels has been between five to 6.8 per cent since October 2011, and is expected to range from 5.5 per cent to 7.5 per cent in April 2012.

The potential to move US corn stocks-to-use levels above 7.5 per cent has likely been deferred to the 2012-2013 marketing year, where they could reach eight to 11 per cent.

This is obviously dependent on an increase in acres harvested and yields being average or more.

Corn carryover from 2011-2012 is expected to be historically low, which supports the need for a record corn crop in 2012.

However with poultry and cattle production declining, and competitive wheat prices, corn use in feed could fall.

With supply tight, there are concerns that importing countries are looking elsewhere. Both Ukraine and Argentina had strong crops last year, and with soybean trading low it is expected that corn plantings will increase in these countries.

However dry weather in Argentina is a concern for corn stocks.

Already US export commitments in 2012 are lower than they were in 2011, however demand from China is still strong.

Corn is becoming a more and more global market, following in the steps of wheat and cattle.

US projected plantings are looking positive, with 2012 estimated plantings looking at around 94 million acres, two million more than last year.

If these plantings are harvested successfully then it is likely that US corn-to-use levels could reach those higher numbers.

With the above in mind, outlook prices for corn are resisting $6.5/ 6.75 a bushel, and looking likely to be around $5.5/ 5.75 a bushel.

Ethanol

Total ethanol usage increased six per cent in 2011, with exports driving this increase with a 200 per cent increase.

US domestic use of ethanol is approaching 2003 lows, with a three per cent decline in usage in 2011. Contrary to this, demand for exports is increasing offsetting the falls in domestic demand. CattleFax predicts that exports will use 300 million bushels of corn in 2012, creating a name for itself on the global energy markets.

It is expected that this growth will continue for the next few years.

There is a bit of a discrepancy over the amount of corn to be used in US ethanol production in 2012, with the USDA estimating 5 billion bushels, but the US Energy Information Agency coming in with a slightly higher estimate of 5.132 million.

CattleFax believes this to be somewhere in the middle.


Charlotte Johnston, Editor

[Mustang Sally Farm]

Friday, February 10, 2012
Public Resistance Ousts GM Crops From EU
EUROPE - Public resistance to genetically modified crops has ensured that the area grown in Europe in 2011 remained at 0.1 per cent of all arable land, shows figures released yesterday by Friends of the Earth Europe. In comparison, organic farming accounted for 3.7 per cent.


The figures follow recent announcements of the biotech industry retreating from parts of Europe.

Mute Schimpf, food campaigner at Friends of the Earth Europe said: "The public’s rejection of genetically modified crops has ensured that they are confined to small pockets of the European Union. Politicians need to listen to public opinion and throw their weight behind the demand for greener and safer farming. Genetically modified crops should play no role in the future of Europe’s farming."

Last month the world’s biggest chemical company, BASF, announced that it was halting the development and commercialisation of genetically modified crops in Europe. It said its decision was due to, "lack of acceptance for this technology in many parts of Europe – from the majority of consumers, farmers and politicians."

Similarly Monsanto announced that it would not sell its genetically modified maize, MON810, in France in 2012, and beyond.

Mute Schimpf continued: “Resistance to genetically modified crops isn’t restricted to Europe. People worldwide are objecting to the power of the biotech companies and their push to control the global food chain.

"The evidence against genetically modified crops continues to grow. Since their introduction in the Americas, herbicide use has rocketed as farmers try to control fast evolving super-weeds, now resistant to many chemicals. Communities and nature are paying the price of the resulting pollution. The biotech system of farming is a dead-end and will fail to meet the needs of the future."

[Mustang Sally Farm]

Monday, February 13, 2012
Plant Breeding Breakthroughs to Reduce Soy Imports
FRANCE - France ranks above average in being protein-independent for the feed sector among European Union (EU) Member States. While soybean meal consumption has remained relatively stable at 4 million metric tons (MT) annually over the past 25 years, use of rapeseed meal has increased from minor levels to more than 2 million MT annually, all domestically sourced as a by-product of France's biodiesel industry.
 

Farmer unions have repeatedly called for increasing independence in protein feeds, but under the current policy conditions and with no major genetic breakthroughs for domestic soybean or pea production, France is expected to continue to be a major consumer and importer of soybean meal in the future.

As a major livestock, poultry and dairy producer in the European Union (EU), France consumes large quantities of feed. In fact, France is the EU's leading producer of compound feed with Germany and Spain, with 15 percent of the EU total production in each of these three Member States.

In 2010, France's compound feed production totaled 21.5 million MT. In 2011, preliminary estimates indicate that France's production of compound feed was marginally lower than in 2010.

In marketing year (MY) 2010/11, approximately 7 million MT of oilseed meals were consumed in France annually. They mainly consisted of soybean meal (4 million MT), followed by rapeseed meal (2.3 million MT), and sunflower meal (800,000 MT).

Main Drivers in Favor of Soybean Products Imports
Over the past decades, the oilseeds industry has repeatedly complained about France's dependence on imported products for protein-rich ingredients in animals feed. The high demand of the livestock, dairy, and poultry industries and the grains and soybean meal basic formulation of compound feed are not the only factors favoring high consumption of soybean meal.

In addition, the ban of meat and bone meals in animal feed in place since the bovine spongiform encephalopathy (BSE) crisis in 1996, and the limited domestic production of soybean products and substitutes are also major drivers in favor of soybean products imports.

The incorporation of grains has been favored by the Common Agricultural Policy (CAP) since its first reform in 1992, which pressured grain prices down. The use of grains in animal feed increased from 30 per cent in 1991 to 50 per cent currently. In addition, grain consumption in animal was been favored by the development of the swine and poultry industries in France, which are large consumers of grains.

Genetics and Plant Breeding would Significantly Increase in France's Production of Soybeans and Peas
According to the USDA report, pea varieties available for the farmers have not benefitted from the extensive research and plant breeding programs that grains and oilseeds have witnessed. As a result, the uncertainty in yields for peas remains high, currently, making farmers reluctant to grow these crops.

As a result, oilseeds and pulses farmer organisations, as well as Parliamentarians, called for intensifying varietal research on peas, both from the public (National Institute for Research in Agriculture - INRA), and the private sector (seed industry).

Although oilseeds and pulses farmer associations didn't call for having access to biotechnology in soybeans, several of their members as well as Parliamentarians denounced the inconsistency of the French and EU policy to approve imports but ban cultivation of biotech crops. Some Parliamentarians considered that they "won't be able to refuse innovation for a very long time."

There are many, among French farmers, who openly say they would be happy to grow biotech herbicide-tolerant soybeans if they were approved for cultivation in France. Some even go as far indicating the potential acreage of 300,000 ha of soybeans including herbicide tolerant varieties, which is twice as high as the target indicated by the oilseeds and pulses growers associations.

[Mustang Sally Farm]

USDA Feed Outlook - February 2012
US 2011/12 corn exports are increased 50 million bushels this month to 1.7 billion as lower production prospects in Argentina reduce competition in global markets.


US Corn Exports Higher With Reduced Competition
US corn supplies are projected up slightly due to increased imports, but the larger increase in exports leaves ending stocks down. Global corn trade is up, supported by increased imports by the EU. World coarse grain production is forecast lower mostly due to a 4.0- million-ton reduction in projected corn production in Argentina. With world coarse grain use projected nearly unchanged, global ending stocks decline.

US corn stocks-to-use ratio

Domestic Outlook

Higher Trade Boosts Feed Grain Supplies and Use for 2011/12
US feed grain supplies projected for 2011/12 edge up 0.3 million metric tons this month to 358.3 million, with increases for corn and oats imports. Supplies, however, remain down 6 percent from last year. Total feed grain use is up due to higher projected corn exports. At 335.5 million metric tons, forecast use is raised 1.3 million tons from last month but remains down 4 percent from the previous season. With demand exceeding production in 2011/12, ending stocks are expected to be drawn down 9.5 million tons from an already low carryin. At a projected 22.8 million tons, stocks would be the lowest since the end of the 1995/96 marketing year.

Feed and residual use for the four feed grains plus wheat on a September-August marketing year basis is lowered this month to 126.2 million metric tons due to lower wheat feed use. Grain-consuming animal units (GCAUs) are projected at 93.6 million this month, down slightly from last month due to a very small inventory change. Broiler weights are down, contributing to lower feed use. Feed and residual use per animal unit in 2011/12 is unchanged this month at 1.35 tons, which is down from 1.39 tons in 2010/11.

US corn utilization

Forecast Corn Exports Raised, Stocks/Use Lowest Since 1995/96
US corn exports were increased 50 million bushels this month due to adverse weather conditions in Argentina, boosting prospects for higher demand. Corn imports are projected 5 million bushels higher, mostly reflecting strength in reported imports through November. As a result, ending stocks slip to 801 million bushels, down 45 million bushels from last month’s projection.

The stocks-to-use ratio is projected at 6.3 percent, down from 6.7 percent last month and the lowest level since 1995/96, when the stocks-to-use fell to 5.0 percent. Unlike in 1995/96, corn being held by farmers for delivery to ethanol plants is expected to account for a significant portion of 2011/12 ending stocks, making it more difficult to draw down ending year supplies.

December 1 US hay stocks and RCAU

Minor Changes Made to Feed Grain Price Projections
The midpoint of the projected range for the 2011/12 US corn price received by farmers remains at $6.20 per bushel this month, but the range is narrowed by 10 cents at each end, to $5.80-$6.60 per bushel. With the exception of prices in September, corn prices at the farm gate have been reported below $6.00 per bushel so far this marketing year. If the preliminary January price of $5.90 per bushel is confirmed, the farm price for the first 5 months of this marketing year will average $5.90 per bushel, weighted by 5-year average marketing percentages by month. The farm price has been below prevailing cash market bids due to farmers forward contracting when prices were lower. Farm gate prices are expected to average around $6.50 per bushel over the coming months to reach the $6.20 midpoint of the projected season average price range. The projected price range for sorghum was narrowed by 10 cents on each end to $5.70 to $6.50 per bushel, and the barley price range was narrowed by 5 cents on each end to $5.15 to$ 5.65.

US corn prices expected to hit record as stocks continue to tighten

International Outlook

Global Coarse Grain Production Prospects Reduced
World coarse grain production in 2011/12 is projected at 1,142.2 million tons, down 3.4 million this month mostly due to reduced prospects in Argentina. Global corn production is forecast down 4.0 million tons to 864.1 million, and sorghum is reduced 0.1 million tons to 60.6 million, but barley prospects are increased 0.6 million tons to 134.0 million and oats are up 0.1 million tons to 23.2 million.

In Argentina, crop damage was confirmed for corn and sorghum. While crucial rains and milder temperatures in the latter half of January allowed filling corn and sorghum to recoup some loses, rainfall for the month was below normal in most of the key growing areas, and temperatures averaged above normal. Forecast corn harvested area is reduced 0.2 million hectares to 3.6 million as corn with poor pollination is expected to be harvested for silage instead for grain. The projected yield in Argentina is reduced 11 percent this month to 6.1 tons per hectare, as damage done by the hot, dry conditions in December has been confirmed, as were additional yield loses caused by hot and dry weather in early January. Sorghum is more drought tolerant than corn, but the crop has experienced serious stress. Argentine sorghum yields are forecast down 8 percent this month to 4.3 tons per hectare, reducing production 0.3 million tons to 4.4 million tons. The barley harvest in Argentina was completed in mostly favorably dry conditions, and area harvested for grain and yields are reportedly higher than expected earlier, boosting production 0.7 million tons to 4.0 million.

While the drought in South America during December and January extended into Southern Brazil, damaging production prospects for first-crop corn, favorable conditions for the second crop are offsetting, leaving total projected corn production unchanged this month. In Paraguay, however, corn production losses will not be offset, and 2011/12 area and yield prospects are reduced this month, cutting production 0.35 million tons to 1.65 million.

In Australia, ample summer rains in Queensland and Northern New South Wales improved sorghum yield prospects, boosting 2011/12 production 0.2 million tons to 2.6 million. The Philippines reported increased corn plantings, increasing projected production 0.14 million tons to 7.14 million.

EU 2011/12 corn production is increased 0.2 million tons to 64.5 million, based on higher yields reported for Italy. Kazakhstan reported 2011/12 harvest results, generally trimming coarse grain area but increasing yields. Barley production is reduced 0.1 million tons to 2.6 million, and rye is reduced, but these reductions are more than offset by increases for oats, up 0.1 million tons to 0.3 million, and small increases for corn and millet.

Changes to the previous year’s coarse grains supply and demand balances are mostly offsetting, but boost world 2011/12 beginning stocks 0.3 million tons this month to 166.2 million. World corn beginning stocks are up 0.8 million tons to 128.8 million, mostly due to a 0.5-million-ton increase for South Africa caused by reduced exports and increased imports estimated for 2010/11. Increased 2010/11 corn imports boost Brazil’s 2011/12 beginning stocks 0.3 million tons, with other changes smaller and mostly offsetting.

Global Coarse Grain Use Prospects Little Changed, Ending Stocks Lower
World coarse grain use in 2011/12 is projected to reach 1,149.9 million tons, up 0.3 million this month. Global corn use is forecast down 0.4 million tons to 867.6 million, but barley is up 0.6 million to 136.8 million.

Canada’s corn use is projected down 0.4 million tons to 11.1 million as a stocks report verifies reduced use during the early months of 2011/12, and meat production prospects are sluggish. However, corn use is projected higher for Argentina, up 0.3 million tons due to expanding poultry production; for Ukraine, up 0.25 million tons due to increased feed prospects; for Chile, up 0.1 million tons as less sorghum is expected to be imported; and for Kazakhstan, up slightly based on increased production. Global local marketing year imports increase more than exports this month, trimming world corn disappearance.

Kazakh barley use is forecast down 0.4 million tons to 1.8 million as increased exports and reduced production limit domestic use. Saudi Arabia’s barley use estimated for 2010/11 is trimmed 0.3 million tons due to tight supplies and the increased use of alternative feed ingredients. These changes support a 0.2-millionton reduction in Saudi Arabia projected 2011/12 feed use. However, these reductions are more than offset by increases for Ukraine, Jordan, Argentina, and Canada. Also, for barley, local marketing year imports increased less than exports, boosting global disappearance.

Reduced 2011/12 coarse grain supplies and nearly unchanged use prospects combine to cut forecast global ending stocks 3.3 million tons to 158.5 million. Corn stocks are projected down 2.8 million tons to 125.3 million, while barley is down 0.6 million to 21.9 million.

The largest reduction in projected 2011/12 ending stocks is for corn in Ukraine, down 2.25 million tons this month to only 1.30 million. The pace of exports and domestic use is expected to keep Ukraine’s corn stock build up modest, despite the huge increase in production. Reduced production prospects are expected to limit stocks in Paraguay, down 0.35 million this month. Strong corn exports are reducing projected ending stocks for Brazil and Russia by 0.2 million tons each. There are also small reductions this month in ending corn stocks for Taiwan and Mexico. These reductions are partly offset by increased stocks prospects for the EU, up 0.7 million tons to 5.9 million as imports and production are higher this month, but meat production in the EU prospects remain sluggish. South Africa’s corn stocks are up 0.5 million tons to 3.4 million, as internal prices have been high enough recently to slow exports, increase imports, and maintain domestic stocks. There are also small increases in corn ending stocks this month for the Philippines, Saudi Arabia, and Kazakhstan.

Russia’s barley ending stocks for 2011/12 are down 0.7 million tons to 1.3 million as strong exports limit stocks. Increased export prospects also limit Canada’s barley ending stocks, down 0.4 million tons this month to 1.0 million. There are small reductions this month in projected barley ending stocks for Kazakhstan, Argentina, and the EU. However, for Ukraine, the slow pace of exports boosts stocks prospects 0.5 million tons to 1.7 million. Saudi Arabia’s ending stocks are increased 0.1 million tons to 1.7 million, supported by the pace of imports.

US Corn Exports up on Reduced Competition and Increased Trade
World corn trade in 2011/12 (October-September) is projected to reach 95.6 million tons, up 1.0 million this month. EU imports are forecast up 1.0 million tons to 4.0 million as the pace of import licenses shows that there is demand for imported corn despite increased production this year. Brazil’s corn imports are increased 0.3 million tons to 0.8 million based on shipments from Paraguay. South Africa’s imports are up 0.2 million tons as it is importing yellow corn due to tight supplies and high internal prices while continuing to export white corn. Corn imports are up by smaller amounts for Chile and the United States. These increases are partly offset by Canada’s corn import reduction of 0.4 million tons to 1.0 million. Canada’s stock report revealed weaker than expected demand for corn in early 2011/12.

Argentina’s corn export prospects for 2011/12, down 3.5 million tons this month to 14.0 million, are sharply constrained by reduced production prospects. Recent high internal corn prices in South Africa are slowing the pace of exports, down 0.3 million tons to 2.0 million. Exports are increased for a number of countries to offset these declines and meet increased demand. Ukraine’s corn exports are up 2.0 million tons this month to 14.0 million based on the strong pace of recent exports that reveal that corn for export is getting priority access to rail cars and port facilities. The massive year-to-year increase in production supports unprecedented export levels, matching those of Argentina. Brazil’s corn exports are boosted 0.5 million tons to 9.0 million based on good prospects for the “safrina” second-crop corn. EU corn exports are up 0.5 million tons to 2.5 million based on the pace of export licenses. Several Eastern European countries have a surplus of corn and are exporting outside the EU, while in Southern and Western Europe, other countries are importing. Russia’s corn exports are up 0.2 million tons to 1.2 million based on the strong pace of shipments to date. There is also a small increase in Moldova’s corn export prospects.

US corn exports in 2011/12 (October-September) are projected up 1.5 million tons to 43.5 million (up 50 million bushels to 1.7 billion bushels for the September- August local marketing year). The forecast is down 4 percent from 2010/11. Import demand in recent months has supported the pace of shipments, with Census corn exports for October to December 2011 at 11.7 million tons, nearly 5 percent higher than the previous year. January 2012 corn export inspections reached 3.45 million tons, up 18 percent from a year ago. However, as of February 2, 2012, outstanding export sales reached only 10.3 million tons, down from 12.4 million a year earlier. Tight US supplies and high prices are expected to keep sales and shipments in the second half of 2011/12 from matching levels of the previous year.

World barley trade for 2011/12 (October-September) is projected up 0.7 million tons this month to 17.0 million. Imports are increased for Saudi Arabia, the EU, Jordan, and Morocco. Ukraine’s exports are cut 1.0 million tons to 3.4 million as the recent pace of shipments has been much slower than expected. Offsetting these changes are increased export prospects for Argentina, up 0.5 million tons to 2.9 million, and increases of 0.3 million each for Canada, the EU, Kazakhstan, and Russia.

Global sorghum trade is reduced 0.3 million tons to 5.1 million due to reduced export prospects for Argentina caused by lower production. Import prospects are reduced for Chile and Japan but increased slightly for Egypt. Sluggish US exports and very low outstanding sales support the current US export forecast, unchanged this month, but down 57 percent on the October-September trade year.

Argentina coarse grain production


February 2012

Published by USDA Economic Research Service

[Mustang Sally Farm]

Tuesday, February 21, 2012
Corn and Soybean Export Progress
US - In December 2011, the USDA judged total corn production prospects in Argentina and Brazil at 3.54 billion bushels, writes Darrel Good.


That forecast was reduced by 120 million bushels in January and by an additional 160 million bushels earlier this month. All of the reduction has been for the Argentine crop. Similarly, combined soybean production in those two countries was forecast at 4.67 billion bushels in December, but was reduced by 90 million bushels in January and an additional 165 million bushels earlier this month.

Total precipitation has been well below average in southern Brazil since late January, suggesting that production there may fall short of the current forecast. Prospects for much smaller South American crops than initially forecast have raised expectations for stronger export demand for US corn and soybeans during the remainder of the 2011-12 marketing year and in the first half of the 2012-13 marketing year. Over the past two months, the USDA has raised the US corn export forecast for the current year by 100 million bushels, to a total of 1.7 billion bushels. The forecast is still 100 million bushels below the initial forecast made in May 2011 and 135 million less than exports of a year ago. The forecast of US soybean exports during the current year has declined steadily from the initial forecast of 1.54 billion bushels to the current forecast of 1.275 billion bushels, 226 million less than exported last year.

Export progress is being carefully monitored for indications that shipments for the year might exceed current forecasts. Export prospects for corn are especially important since year-ending stocks are expected to be small. There are three regular sources of information relative to the progress of US corn and soybean exports. A weekly report, released on Monday morning (except for holidays), reports quantities inspected for export in the previous week ended on Thursday and cumulative inspections since the beginning of the marketing year. The US Export Sales Report, released on Thursday morning, reports cumulative marketing year exports and the magnitude of unshipped sales as of Thursday of the preceding week. Finally, the US Census Bureau reports exports on a monthly basis. That report is typically released about six weeks after the month ends. The Census Bureau estimates for the marketing year become the official estimates shown in the USDA’s WASDE report.

For corn, cumulative 2011-12 marketing year export inspections totaled 741 million bushels through February 9. Through December 2011, cumulative marketing year Census Bureau export estimates exceeded inspections by 23 million bushels. Assuming that margin has persisted, cumulative exports through 9 February totaled 764 million bushels. To reach the USDA projection of 1.7 billion bushels for the year, exports need to total 936 million bushels during the remainder of the year. That is an average of 32.1 million bushels per week, compared to the average to date of 33 million. As of 9 February, the USDA reported unshipped export sales of 420 million bushels. Export commitments (shipments plus outstanding sales) totaled 1.184 billion bushels, requiring additional sales of about 18 million bushels per week. For the five weeks ended 9 February, new sales averaged 34 million bushels per week.

For soybeans, cumulative marketing year export inspections totaled 794.4 million bushels through 9 February. Through December 2011, cumulative Census Bureau export inspections were 5.5 million less than inspections. Assuming that margin has persisted, cumulative exports were near 789 million bushels on 9 February. To reach the USDA projection of 1.275 billion bushels, exports need to total 486 million bushels during the remainder of the year, or an average of 16.7 million bushels per week. Since exports begin a sharp seasonal decline in April, a comparison of the needed rate to the average rate to date is not useful. The needed rate, however, is about 1.7 million bushels larger than the average during the same period last year. As of 9 February, the USDA reported unshipped export sales of 221.5 million bushels, so that export commitments stood at 1.01 billion bushels. New sales of about 9.1 million bushels per week are needed for exports to reach the projected level. Since the seasonal decline in exports has not yet begun, the current pace of sales is well above the needed rate, averaging nearly 21 million bushels per week for the five weeks ended 9 February.

Based on the current pace of export activity and the likelihood that South American production will fall short of current projections, U.S corn and soybean exports for the current year are expected to exceed current projections.

[Mustang Sally Farm]

Global Coarse Grain Use Prospects Little Changed, Ending Stocks Lower
22 February 2012




GLOBAL - World coarse grain use in 2011/12 is projected to reach 1,149.9 million tons, up 0.3 million this month. Global corn use is forecast down 0.4 million tons to 867.6 million, but barley is up 0.6 million to 136.8 million.
 
Canada’s corn use is projected down 0.4 million tons to 11.1 million as a stocks report verifies reduced use during the early months of 2011/12, and meat production prospects are sluggish.
 
However, corn use is projected higher for Argentina, up 0.3 million tons due to expanding poultry production; for Ukraine, up 0.25 million tons due to increased feed prospects; for Chile, up 0.1 million tons as less sorghum is expected to be imported; and for Kazakhstan, up slightly based on increased production. Global local marketing year imports increase more than exports this month, trimming world corn disappearance.

[Mustang Sally Farm]

Argentina May Export Corn to China
22 February 2012



ARGENTINA - Argentina may export around three million tons of corn to China this year, as a result of an agreement last week in Buenos Aires at the ministry of Agriculture.

"This agreement will make China a significant importer in the coming years, China is expected to import about 3 million tons of corn," said a ministry statement.
 
According to iEco, the agreement for exporting corn from Argentina to China was signed by Minister of Agriculture Norberto Yauhar and Minister of General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) of China, Zhi Shuping.
 
The statement from the ministry said China was self-sufficient until 2010, but due to increased consumption of pork and poultry, domestic demand for maize for animal feed had also increased.
 
The deal comes weeks before the Argentine farmers start harvesting the corn which, although it was affected by drought, is expected to generate an output of at least 22 million tons.
 
Argentina is the second largest exporter of corn and the leading international oil and soybean meal exporter.

[Mustang Sally Farm]

Friday, February 24, 2012
CME: Corn Prices for 2012/13 to be Almost 20% Lower
US - USDA expects farmers to plant about 94 million acres of corn this spring, 2.1 million acres more than the previous year, write Steve Meyer and Len Steiner.


Before looking at the upcoming USDA cattle on feed report, a few words are in order about the USDA Outlook forum currently under way in Washington DC. USDA is expected to issue its unofficial projection of grain supplies for 2012/13 during the outlook presentations and markets are paying close attention to some of their initial assumptions as they will influence the official estimates that will be released in May. In his presentation, the USDA chief economist Joseph Glauber will note that USDA expects farmers to plant about 94 million acres of corn this spring, 2.1 million acres more than the previous year. Combined wheat, corn and soybean acres are expected to increase by 5.6 million acres. Ethanol use also is expected to slow down and USDA now pegs ethanol demand for 2012/13 at 4.95 billion bushels compared to the current year estimate of 5 billion bushels. Increased acres, stagnant demand for ethanol and limited feed use (compared to prior years) will likely cause USDA to bolster its estimates for corn ending stocks in 2012-13. USDA now estimates corn prices for 2012/13 at $5 per bushel, down almost 20% from year prior. There is plenty that could go wrong this year and pressure prices higher but this will be first salvo in what promises to be another volatile year considering uncertainty about the size of current corn stocks, escalating energy prices and dry conditions in key corn production areas.

The upcoming cattle on feed report is expected to show that on feed supplies will likely be steady compared to the previous month although about 2.5% higher than a year ago. Despite the higher feedlot inventories, cattle prices continue to escalate as a larger portion of those cattle have yet to reach market weights. The supply of feeders outside of feedlots is tight and this is reflected in feeder prices which continue to hit record highs on a daily basis. The CME Feeder Cattle index closed on Wednesday at a new record high of $156.57/cwt, 21% higher than a year ago.

Feeder supplies are expected to remain tight in part because producers are expected to hold back a few more replacement heifers. As usual, analysts polled ahead of the report show a wide range of opinions regarding the number of cattle placed in January (see table). On average, they expect placements about 1.2% below year ago levels. Despite strong cattle prices outfront, feedlots are cautious about placing $160 feeders with $6+ corn. Cattle futures have surged higher in recent days (although they were down yesterday) as packers push through higher prices. The big question mark, however, is the outlook for cattle and beef prices after April 15. Will current record high beef values scare away retailers and force them to limit beef features into the grilling season? Last year cattle broke sharply in May and memories of those loses are still fresh. As for marketings, the analyst survey showed they expect feedlot sales about steady with a year ago. The steer and heifer slaughter data for January shows slaughter was only slightly lower than a year ago.

[Mustang Sally Farm]

Friday, March 09, 2012
Near-Record Wheat Production Expected This Year
GLOBAL - FAO has forecast that 2012 world wheat production will be the second highest on record at 690 million tonnes and also announced that international food prices rose one per cent in February — the second increase in two months.


Published this week, FAO’s quarterly Crop Prospects and Food Situation report forecast a 2012 wheat crop 10 million tonnes or 1.4 per cent down from the record 2011 harvest but still well above the average of the past five years.

Although plantings have increased or are forecast to increase in many countries this year in response to continuing strong prices, a return to normal yields is expected in areas where record highs were achieved last year, the report said. But it was still too early for a global forecast of 2012 cereal output, it added.

Impact of cold weather
Crop Prospects also noted a firming of international cereal prices in recent weeks due to tightening current wheat supplies and concerns over the impact of severe cold weather in Europe and the Commonwealth of Independent States.

Turning to the situation at regional level, the report said that adverse weather in West Africa caused a sharp drop in cereal and pasture production in large parts of the Sahel.

This, combined with high food prices and civil strife, has led to high food insecurity and increased malnutrition in several countries, notably in Niger, Chad, Mauritania, Mali and Burkina Faso.

In the Near East, food security has deteriorated in the Syrian Arab Republic and Yemen following civil conflict in the two countries. In Syria about 1.4 million people have become food insecure while thousands of families have been forced to flee their homes in Yemen.

In Eastern Africa, despite some improvement, the food situation of vulnerable groups remains precarious, especially in pastoral areas affected by earlier drought. The food security situation in the Sudan and South Sudan is of concern following poor harvests.

In Southern Africa, overall crop prospects remain satisfactory despite dry spells and cyclones in some areas.

Gains in India
In Far East Asia, prospects for the 2012 wheat crop are generally favourable with output expected to reach last year’s record level due in particular to good gains in India.

In Central America, dry weather reduced plantings of the 2012 secondary maize crop in Mexico. Elsewhere, good maize harvests are estimated despite losses due to torrential rains during the recently concluded secondary seasons.

In South America, a prolonged dry spell affected the 2012 maize crop in Argentina and Brazil but above-average outputs are still forecast due to increased plantings.

The cereal import bill of Low-Income Food-Deficit Countries (LIFDCs) is expected to climb to a record level of $ 32.62 billion in 2012, slightly above the 2010/11 estimate, mainly due to a decline in production and a rise in import requirements in the major importing countries.

Food Price Index
FAO’s Food Price Index, published separately yesterday, rose 1 per cent, or 2.4 points from January to February. The Index climbed nearly two per cent in January – its first increase in six months.

The increase in the February Index was mostly driven by higher prices of sugar, oils and cereals while dairy prices fell slightly after a marked rise in January. At its current level, the Index was 10 per cent below its peak in February 2011.

Increased imports due to a weaker US Dollar and plunging freight rates have also characterized world markets since the beginning of 2012. This, combined with unfavourable weather conditions in major exporting countries has supported world prices in recent weeks, FAO said in a brief accompanying the Food Price Index.

Cereal prices
The FAO Cereal Price Index averaged 227 points in February, up 2 per cent, or 4.4 points, from January. International wheat prices rose most followed by maize, while rice quotations were generally lower.

The FAO Oils/Fats Price Index registered another gain in February to 239 points, 2 per cent or 5 points, higher than in January. Poor monthly production growth in palm oil, together with the prospect of a tight supply and demand balance for total vegetable oils were among the reasons.

The FAO Meat Price Index averaged 175 points in February, virtually unchanged from the previous month’s level. Prices of pig meat gained 3.4 per cent, sustained by strong purchases in Asia and recent disease outbreaks in the Russia Federation. By contrast, prices of poultry, bovine and sheep meat lost some ground.

The FAO Dairy Price Index averaged 205 points in February, down marginally from January, The decline was mainly caused by falling skim milk powder and casein quotations. However, prices of butter, cheese and whole milk powder remained relatively steady.

The FAO Sugar Price Index rose to 342 points in February, up 2.4 per cent, or 8 points, from January, but still 18 per cent (76 points) lower than in February last year. Last month’s increase was largely driven by unfavourable weather conditions in Brazil, the world's largest producer and exporter of sugar.

[Mustang Sally Farm]

Tuesday, March 13, 2012
Continued Focus on Corn Consumption and Stocks
US - May 2012 corn futures have traded in a range of about $1.00 per bushel since last fall, writes Darrel Good.


Since late January, the trading range has been about $.40 per bushel and the current price is near the top of that range. The narrowing of the trading range for old-crop corn prices may point to a breakout from the long standing sideways trend. The central question for the direction of old-crop prices is whether consumption has slowed enough to ensure a minimum level of year ending stocks.

The USDA currently projects 2011-12 marketing year ending stocks of corn at 801 million bushels. A minimum level of carryover is about 650 million bushels, assuming normal timing of the new-crop harvest. Some had expected the USDA to increase the projection of marketing year exports in last week’s WASDE report, but that did not happen. There were also rumors late last week that China purchased large quantities of US corn, but those purchases had not been confirmed as of this writing. With the corn marketing year just passing the mid-point, export shipments need to average about 32.1 million bushels per week to reach the USDA projection of 1.7 billion bushels for the year. That compares to the average pace to date of 32.9 million bushels and the average pace of 37.1 million bushels per week during the last half of the 2010-11 marketing year. As of 1 March, unshipped export sales of US corn stood at 405 million bushels, 100 million less than on the same date a year earlier. New sales need to average about 17 million bushels per week in order for export commitments to reach 1.7 billion bushels. It appears that exports could still exceed the current USDA projection by a small margin.

For the year, the USDA projects corn use for the production of ethanol and co-products at 5 billion bushels, just below the record 5.021 billion bushels of last year. Through the first half of the 2011-12 marketing year, ethanol production exceeded that of a year ago by about 3.0 per cent. To reach the USDA projection of corn use for the year, ethanol production during the last half of the marketing year needs to be 3.8 per cent below the level of production during the last half of the 2010-11 marketing year. During the week ended 2 March, ethanol production was 2.6 per cent larger than in the same week last year. It appears that corn use for ethanol and co-product production will reach the USDA projection, but declining transportation fuel consumption and the delay in implementing E-15 suggests that the so called “blend wall” for E-10 is rapidly approaching. Ethanol exports will likely have to remain strong in order for ethanol production and corn use to reach the current projection for the year. Brazil has become a major importer of US ethanol over the past year. Ironically, US ethanol imports from Brazil may also increase as Brazilian ethanol qualifies as an advanced biofuel under the Renewable Fuel Standards while US ethanol does not. The result would be the very inefficient swapping of ethanol between the two countries.

There is still uncertainty about the on-going level of feed and residual use of corn and the implications for year-ending stocks. As pointed last week, the March Grain Stocks report will provide for an estimate of feed and residual use during the December –February quarter. Prospects for feed and residual use of corn during the summer quarter will be influenced by animal numbers as reflected in the monthly Cattle on Feed reports, monthly estimates of milk cow numbers, weekly broiler placements, and the 30 March Hogs and Pigs report. The estimated size of the upcoming wheat harvest and resulting prices may also have some impact on the feed demand for corn this summer.

The pattern of strong basis and inverted futures market prices referred to last week continues and has intensified in recent trading sessions. The expiring March 2012 futures contract is $0.14 premium to the July contract, compared to the $.05 discount at the end of February. It is still not clear if the strong basis and inverted futures market signals a shortage of corn or tight holding, or both. Anecdotal information suggests that a large portion of current inventories of corn are owned by farmers as other commercials have given up ownership in response to the lack of carry in the market. The estimate of March 1 stocks will reveal where stocks are being held, but will not reveal ownership of those stocks.

The 1 March stocks estimate, along with revealed rate of consumption over the next several weeks will determine how much strength in old crop prices is needed to stretch inventories until harvest. Expectations remain for a much larger crop and lower prices for the 2012-13 marketing year.

[Mustang Sally Farm]

Tuesday, March 20, 2012
Corn Yield Prospects Impact Prices
US - With 2011-12 marketing year-ending stocks of US corn expected to be near pipeline levels, the size of the 2012 crop has substantial price implications, writes Darrel Good.


Acreage intentions will be revealed in the USDA’s 30 March Prospective Plantings report, but much of the current discussion centers on prospects for the US average corn yield.

Widely differing views of yield prospects for 2012 have emerged. A number of factors may contribute to the diverse views, but four have received a lot of attention. These include (1) the timing of planting, (2) the magnitude and potential change in the trend yield, (3) expected summer weather conditions, and (4) the location and magnitude of acreage changes. A brief discussion of these factors follows, with more detailed analysis to be provided in upcoming posts at farmdocdaily.

The mild winter weather and early spring fieldwork suggests that the 2012 crop will be planted in a very timely fashion. There is a general perception that early planting results in a higher US average yield potential, all other things equal. Agronomic research in the Corn Belt generally reveals a slight yield penalty for extremely early planting (March), a wide planting window for maximum or near maximum yield potential (early to mid-April through early May), and a yield penalty for late planting that increases with the lateness of planting. While there is a clear yield penalty for late planting, there is not a similar yield premium for early planting. The majority of the crop is planted in the optimum window in most years. To have an effect on US average yield potential, a substantially larger or smaller portion of the crop would have to be planted outside the optimum window. For 2012, a smaller than average per centage of the crop planted late might increase yield potential, but that impact would be quite small.

Widely varying opinions about the trend in US average corn yields have emerged in recent years. The long term increase in average yields is associated with the development and adoption of crop production technology and crop management practices. The nature of those developments has varied over time, but there has been a steady flow of yield-enhancing technology and practices. For the most part, variation around the trend yield reflects variation in growing season weather, although events such as pest infestations or early occurrences of freezing temperatures can have a yield effect. Confusion about the yield impact of technology and weather can occur if there is a string of years with very favorable or unfavorable weather. In that case, the impact of weather can mistakenly be attributed to technology and give the impression that the underlying trend yield has changed. That appeared to have happened from 2003 through 2009 when generally favorable weather led some to believe that the underlying trend yield was increasing at a faster rate. The reverse may have occurred recently as poor weather in 2010 and 2011 resulted in low yields following the record yield of 2009. Overall evidence suggests that the trend in US average corn yields has been linear since 1960 (click here for more information).

Opinions about likely summer weather in the Corn Belt center on the ElNino/LaNina Southern Oscillation (ENSO). The Climate Prediction Center forecasts that the winter LaNina is transitioning to neutral conditions. Historically, such a transition has been mostly associated with corn yields near trend value, although deviations in both directions have occurred. Others are suggesting a transition to an ElNino and increased chances of an above trend yield in 2012.

It is generally expected that US corn plantings will increase by 2 to 3 million acres in 2012. It has been argued that the increase will occur in lower yielding areas and therefore prove to be a drag on the US average yield. However, the yield implication of increased acreage is likely to be extremely small. First, some of the increase in corn acreage may occur in the higher yielding areas of the eastern Corn Belt since acreage there in 2011 was below the recent peak of 2007. Second, a 2 to 3 per cent increase in acreage has the potential to only marginally impact the US average yield even if all the increase was in low yielding areas.

While the 2012 yield debate will continue well into the growing season, the most logical expectation is for an average yield near the long term trend. The trend yield for 2012 is just under 160 bushels per acre. The USDA’s early forecast for 2012 is for a yield of 164 bushels. With harvested acreage projected at 87 million acres, a 4 to 5 bushel difference in the US average corn yield represents a difference of 350 to 435 million bushels in crop size. Prospects of an average yield near 160 bushels would suggest that new crop corn prices are probably low enough, while prospects for a yield of 164 bushels or higher would likely push prices marginally lower.