- Late yesterday Int’l FC Stone released their latest production forecasts which showed US 2015 corn production higher at 13.457 billion bu (from 13.381 previously) with yield at 165.9 bushels/acre, up from 165.0 last month. For comparison current USDA numbers are 13.686 and 168.8. They trimmed US 2015 soybean output to 3.791 billion bu (from 3.797 billion previously) with yield increased to 45.4 bushels/acre from 45.0 a month ago. Current USDA numbers are 3.916 and 46.9. Their figures are based on customer (grower) surveys and are based upon final US output not the September USDA report.
- Early trade in Chicago today saw Stone’s figures as mildly supportive, particularly on the opening but focus soon returned to slumping global grain prices as well as further crude losses. Buyers have been noticeable by their absence today. There is a lack of expectation over tomorrow’s weekly US export numbers despite an increasing seasonal pace. Cheaper FOB prices from S American corn and Black Sea/French wheat remain a limiting factor for US exports.
- Global wheat and corn FOB levels continue to slide as evidenced by Ethiopia being offered very cheap wheat in their tender, below yesterday’s reported (cheap) Algerian levels. S Korea has secured S American corn $0.21/bu below US levels for early new year shipment. French export silos are fully stocked and look as if they need to make space for new crop corn and sunflower seed supplies. Consumers the world over see little reason to commit too far forward in the face of such a volume of supply in corn, wheat and soybeans.
- There is a strong argument to take levels of cover higher into the winter, prices are at season lows and in some cases levels not seen for some years. UK farmer selling is likely to slow if prices slip much further, and the potential for a starved market does exist although global supply pressure is likely to ensure prices do not make massive gains.
- Data supportive to our last paragraph does lie in the wings although it is early days. There are reports of dry conditions across key Russian and Ukraine grain production areas and winter planting is taking place in conditions less than ideal for germination. As we say, it is early days and our view is that spring weather is more likely to impact output than dry conditions at planting. Additionally, India’s monsoon rains are seen as falling short of the forecast, which was at only 88% of long-term average. This could make the season the driest since 2009 and restrict crop outputs. Current Indian stocks should be sufficient in key agri commodities such as wheat, rice and sugar but restricted rains could leave a big hole in cooking oil supplies leaving a big import requirement.
- Position risk management is now becoming a more significant issue.