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Archive for March, 2013

The wait is over. USDA’s Prospective Plantings report shows producers intend to plant a record number of acres to corn, which comes as no surprise, and intended soybean acreage could be the fourth highest ever. Old-crop stocks of corn, however, were much higher than expected, according to USDA’s quarterly Grain Stocks report, which will weigh on corn prices moving forward.

The biggest surprise in the Prospective Plantings report was the more 450,000-acre increase in spring wheat plantings in North Dakota, says Brian Basting of Advance Trading, Bloomington, Illinois. Basting was the commentator on an MGEX press briefing following the release of the report.

“This year will not be a repeat of last year,” says Basting. Last year’s warm, dry spring encouraged one of the fastest planting and early growing seasons on record. ” This year looks completely different,” he says. “We will see flooding in the northern plains and southern Canada.”

Released at noon, EDT, today, the Prospective Plantings report is a snapshot of producers’ intentions as of March 1. Adverse weather that leads to planting delays could shift intended acreage into other crops, primarily soybeans as the season progresses.

Record Corn Acres Expected
Corn producers intend to plant 97.3 million acres, right in line with the average estimate of 97.34 million acres. Additional acres are expected to come from small grains, cotton, pastureland, and the Conservation Reserve Program. If realized, intended corn acreage would be the highest ever. Last year, producers planted 97.16 million acres of corn.

“What was interesting about the Prospective Plantings report is the spread between North and South Dakota,” says Chad Hart, agricultural economist with Iowa State University. “North Dakota is pulling in land for both corn and soybeans, setting record acres for both crops. Whereas South Dakota growers intend to pull back on both crops.” North Dakota’s hard red spring wheat acreage is projected to be the highest since 2010.

Producers in the western Corn Belt states of South Dakota, Nebraska, and Kansas, where drought is still a concern, switched some acres out of both corn and soybeans and into sorghum, a more drought-tolerant choice.

The biggest surprise in the quarterly Grain Stocks report was that old-crop corn stocks were substantially higher than expected at 5.4 billion bushels, indicating that feed use, exports, and demand from the ethanol sector were all softer than anticipated. The combination of record acres and higher-than anticipated old-crop stocks sparked a selloff in the futures market that sent old-crop corn futures tumbling their 40-cent limit.

Large Wheat and Soybean Crops, As Well
USDA’s Prospective Plantings report also showed that intended plantings of soybeans, if realized, would be the fourth largest ever. According to the report, soybean producers intend to plant 77.1 million acres of beans, at the bottom end of the range of pre-report trade estimates of 77 million to 79.7 million acres and lower than the average trade estimate of 78.4 million acres. Last year, producers planted 77.2 million acres of soybeans.

Projected plantings of all wheat at 56.34 million acres are up substantially from last year’s 55.74 million acres but are just under the average pre-report trade estimate of 56.4 million

Recognize that 11 a.m. to 2 p.m. central time on Thursday could be very busy in the pits as the market tries to work through the reports before taking three days off. The Good Friday market close leaves three days for the market to digest the reports before opening again on Easter Sunday at 5:00 p.m. central. There are usually some surprises in both the grains stocks and planting intentions numbers coming out on the 28th.

March 27, 2013

By: Editors

Analysts expect producers to plant one of largest areas ever to corn once winter loosens its grip on the heartland.

Allendale Inc., McHenry, Illinois, released results from its planting intentions survey recently that showed producers could plant the second-largest acreage ever to corn this year of 96.956 million acres, second only to last year’s 97.155 million acres. The brokerage firm further estimates that assuming a trend yield of 156.97 bushels per acre would mean total corn production could hit 13.912 billion bushels, which would be 29 percent larger than last year’s 10.78 billion bushels.

While not as bullish as in its previous acreage estimates, Informa Economics, a private forecasting firm based in Memphis, Tennessee, now pegs corn plantings at a record-high 97.75 million acres, down 1.6% from its January estimate of 99.3 million acres.

“The drought is slowly receding in the western Corn Belt,” says Chad Hart, agricultural economist at Iowa State University. However, severe to exceptional drought still has a grip on the majority of the western Corn Belt.

“The eastern Corn Belt could see trend yields on corn, and if the western Corn Belt averages 140 bushels per acre, we are still talking about a whopper corn crop,” says Hart. “Unless the drought re-intensifies and moves east again, we are looking at a corn crop of 13 billion to 14 billion bushels. With a trend yield of 164 bushels per acre, corn production could hit 14.5 billion bushels.”

Record Soybean Acreage as Well?

According to Allendale’s soybean planting estimates, producers could plant 78.324 million acres of beans, a record-high acreage. Allendale further estimates that a trend yield of 43.35 bushel per acre would produce 3.349 billion bushels of soybeans, the second highest production level on record and 11 percent larger than last year’s 3.015 billion bushels.

Hart expects acreage intended for corn could give way to soybeans as the season progresses. In 13 of the past 20 years, he says, planting delays resulted in fewer corn acres and more soybean acres than the Prospective Plantings report projected.

Informa’s projection for soybean acres of 78.5 million acres is higher than Allendale’s, but lower than its January forecast of 78.8 million.

With record acreage projected for both corn and soybeans, where will the additional land come from? Some will come from pasture, some from small grains, some from cotton, and some from the Conservation Reserve Program, notes Hart.

Stocks Still Tight

Allendale also released estimates for the upcoming quarterly Grain Stocks report. For corn, Allendale put stocks at 5.07 billion bushels, compared with stocks of 8.03 billion at the end of 2012. The firm estimates soybean stocks of 912 million bushels, down from 1.97 billion at the end of 2012. If realized, stocks of both corn and soybeans would be substantially lower March 1, 2012, when corn stocks were 6.023 billion bushels and soybean inventories were 1.375 billion bushels.

“The Grain Stocks report will be really interesting,” says Hart. “Stocks for both crops are still incredibly tight.” If the report holds any surprise, it will be that feed demand for corn has not been as strong as anticipated, which means stocks will be larger than expected, says Hart. And that would be bearish for corn prices.

Farm Futures Magazine is projecting record US soybean acreage and the most corn acres planted since 1936. 

        U.S. soybean acreage is seen at 79.09 million acres, up 2.5% on the year with as much as a 10% increase in parts of the Western Cornbelt.

        Corn acreage is estimated at 97.43 million acres, slightly more than 2012 with year to year increases in the Eastern Cornbelt and Southern US.

        All winter wheat acreage is estimated at 42.15 million acres, up 2% from last year. Soft red at 9.51 million acres, a 17.2% rise; Hard red at 29.1 million, a 2.5% decline; White winter at 3.54 million acres, 5.8% more than in 2012. 

        All spring wheat is estimated at 11.91 million, down 3.1%; Durum at 2.06 million acres, 2.8% below last year. 

        All wheat acreage is projected at 56.12 million acres, a 0.7% year to year increase.

        The numbers above are dependent on spring weather and 18% of the farmers surveyed said they could shift 50% or more of their acres.

International Grains Council (ICG) updating global forecasts. 

        World corn production to climb by 9% in the 2013-14 crop year, with the US harvest projected to rise as much as 30% . 

        Global corn stocks may increase by 19% from a 16-year low, as output rises faster than consumption.

        Argentina’s corn estimate cut by 1 million tons to 26 million, USDA currently at 26.5 million. On the flip side they raised production estimates for Turkey, Thailand and India. 

        US exports were cut by 1.5 million tons (now 22 million), while they raised Brazil’s export shipments by 1.0 million tons (now 27 million). 

        World wheat production will rise by 4% to 682 million. This is similar to there previous forecast. Basically production is forecast to be 29 million tons more than last year. But still less than the record crop in 11/12 of 697 million tons. 

        Global wheat use should increase and leave “little room” to rebuild stocks, with inventories forecast to climb by just 3-5 million metric tons in 2013-14.

        World wheat carryover stocks are seen at 177 million tons at the end of 2012-13, compared with a February outlook for inventories of 176 million tons.

        World Soybean production in 2012-13 will be just 266 million tons, 3 million tons less than forecast in February.

        Global rice harvest may move higher to 468 million tons, compared with last month’s prediction of 466 million tons.

March 15 (Bloomberg) — U.S. farmers will plant more corn and soybean acres than the government forecast last month, according to a survey of growers by Allendale Inc. Wheat planting will rise for a third consecutive year, it said.

Farmers indicated they will sow 96.956 million acres with corn, Allendale said today in an e-mailed release. That’s down from last year’s 97.155 million acres and above the 96.5 million that the U.S. Department of Agriculture forecast on Feb. 22.

Soybean plantings will rise to 78.324 million acres from 77.198 million last year, according to Allendale’s 24th annual survey of farmers, which was conducted this year from Feb. 25 to March 8. The USDA said last month that 77.5 million acres would be sown this year.

The combined area planted with all wheat varieties will rise to 56.261 million acres from 55.736 million in 2012, according to the survey by Allendale, a farm-market adviser and brokerage based in McHenry, Illinois. Last month, the USDA said farmers would sow 56 million acres.

The USDA on March 28 is scheduled to release the results of a national survey of farmers’ planting intentions, taken this month.

WASDE: U.S. Corn Exports Down, Imports Up

COARSE GRAINS: Projected 2012/13 U.S. corn ending stocks are unchanged this month as an increase in imports and lower exports support higher expected feed and residual disappearance. Corn imports are raised 25 million bushels reflecting the strong pace of shipments reported through January.

Corn exports are lowered 75 million bushels based on the slow pace of sales and shipments to date and stronger expected competition from South American corn and from competitively priced feed quality wheat. Feed and residual disappearance for corn is raised an offsetting 100 million bushels with continued expansion in poultry production and a 10-million-bushel reduction in projected sorghum feed and residual use.

The projected season-average farm prices for corn and sorghum are each lowered 20 cents on the high end of the range to $6.75 to $7.45 per bushel and $6.70 to $7.40 per bushel, respectively. The projected farm price ranges for barley and oats are narrowed 10 cents on each end to $6.25 to $6.55 per bushel and $3.70 to $3.90 per bushel, respectively.

Global coarse grain supplies for 2012/13 are projected 1.0 million tons lower with a 0.8-million-ton decrease in production. Corn production is lowered 0.5 million tons for Argentina reflecting extended dryness in February that reduced yield prospects, particularly for late-planted corn. South Africa corn production is reduced 0.5 million tons as dryness and heat reduce yield prospects in the western areas of the maize belt. Sorghum production is lowered 0.5 million tons for Australia as excessively high temperatures have reduced harvested area as indicated by the latest government estimates and yield prospects as confirmed by satellite imagery. India corn production is raised 0.4 million tons as planting progress reports for the winter crop indicate a year-to-year increase in area.

Global coarse grain exports for 2012/13 are lowered this month mostly reflecting the projected reduction in U.S. corn exports. World corn feed and residual use is raised with higher expected use in the United States. Corn feed use is also raised for India and Malaysia. Corn imports and feeding are lowered for South Korea with higher expected imports of feed quality wheat and increased wheat feeding. Sorghum imports and feeding are raised for Mexico with the increase in U.S. sorghum exports. Global coarse grain ending stocks decline 0.6 million tons with small reductions in corn stocks for Brazil, Malaysia, Argentina, and India.

WASDE: Competition from South American Soybean Crop

OILSEEDS: U.S. soybean supply and use projections for 2012/13 are unchanged this month, leaving ending stocks at 125 million bushels. Although soybean export commitments through February exceeded last year’s pace, U.S. exports are expected to decline in the months ahead as increased competition from a record South American soybean crop limits additional U.S. sales during the second half of the marketing year.

Soybean crush is also ahead of last year’s pace, but is projected to slow in the second half of the marketing year on declining soybean meal exports as competition from South America, especially Argentina, increases with the new-crop harvest.

The projected season-average price range for soybeans is narrowed 25 cents on both ends of the range to $13.80 to $14.80 per bushel. Soybean oil prices are forecast at 48.5 to 51.5 cents per pound, down 1 cent at the midpoint. Soybean meal prices are projected at $425 to $445 per short ton, down 10 dollars at the midpoint.

Global oilseed production for 2012/13 is projected at 466.8 million tons, down slightly from last month as reduced soybean and sunflowerseed production is mostly offset by increased rapeseed and cottonseed production. Foreign production, projected at 374.1 million tons, accounts for all of the change. Argentina soybean production is projected at 51.5 million tons, down 1.5 million.

Despite widespread rains in recent weeks, the extended dry period during planting and early crop development limited plantings and reduced yield prospects. China rapeseed production is projected at 13.5 million tons, up 0.9 million based on increased area and yield indicated in recently released official government statistics. Other changes include higher rapeseed production for Australia and India, reduced sunflowerseed production for Argentina, and increased palm oil production for Malaysia. Cottonseed production is increased for China and reduced for Pakistan and Brazil.

WASDE: U.S. Wheat Exports Down, Imports Unchanged

WHEAT: U.S. wheat exports for 2012/13 are projected 25 million bushels lower this month boosting projected ending stocks by the same amount. Continued strong competition, particularly from EU-27 and FSU-12, further reduce prospects for U.S. wheat shipments. 

Projected exports for Hard Red Winter wheat are lowered 25 million bushels. Exports are also lowered 10 million bushels and 5 million bushels, respectively, for White and Hard Red Spring wheat, but raised 15 million bushels for Soft Red Winter wheat. All-wheat imports are unchanged, but small adjustments are made among the classes. Trade changes largely reflect the pace of sales and shipments to date. The projected range for the season-average farm price for wheat is lowered 10 cents at the midpoint and narrowed to $7.65 to $7.95 per bushel.

Global wheat supplies for 2012/13 are raised 1.8 million tons with higher production. India production is increased 1.0 million tons based on the latest revisions by the government of India for the crop harvested nearly a year ago. EU-27 production is raised 0.5 million tons based on the latest production estimate released by the government of Lithuania.  Production is estimated 0.3 million tons higher for Nepal in line with historical revisions to the country’s production series this month.

Global wheat trade is projected higher for 2012/13.Imports are raised 1.0 million tons for Iran, 0.5 million tons for South Korea, 0.3 million tons for Algeria, and 0.2 million tons each for China and Japan. Partly offsetting are reductions of 1.0 million tons for Egypt and 0.2 million tons for Kenya.

The old weather saying goes, “If March comes in like a lion, it will go out like a lamb.” And vice versa. So, do current corn prices have more bite or baa?

As of Friday, corn prices made a significant turn up. After weeks of losses, March 2013 corn closed at $7.24 and May 2013 at $7.08.

“The good news is we quit going down,” says Jerry Gulke, president of the Gulke Group. “Eventually there is some type of a bottom.”

Will this trend continue? Gulke says as of now, we still don’t know, for sure, what’s going on out there in terms of demand.

But, some new information is on the horizon. On Friday, March 8, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports.

In terms of next week’s report, Gulke says farmers should pay close attention to the new production information in Europe, South American and other places.

Also, keep an eye on demand. “What you don’t want to see is feed usage and exports drop. We don’t want demand to still be going down, after we’ve lowered prices.”

Also this month, on March 28, USDA will release its Prospective Plantings report and quarterly Grain Stocks report. Gulke says these reports will be equally as important as the information USDA release on Jan. 11.

Until these reports are issued, Gulke says the market has kind of taken a breather. “We are trending sideways, so there is just as much upside risk right now, as there is downside. This is a good way to start out March, with an unchanged to neutral attitude.”

Crop Insurance Levels Set

With the calendar turning to March, farmers now know USDA’s Rick Management Agency’s crop insurance prices for 2013.
Here’s an overview:

       Corn: $5.65 per bu.; 0.19 volatility factor

       Soybeans: $12.87 per bu.; 0.17 volatility factor

       Spring wheat: $8.44 per bu.; 0.15 volatility factor

      In 2012, base prices were $5.68 per bu. for corn, $12.55 per bu. for soybeans and $7.84 per bu. for spring wheat.

Gulke says at these insurance levels, farmers will face a lot of risk. His advice is to explore the multitude of crop insurance options available and be open to revising your business plan this year. “If there was ever a need for flexibility in choosing crop insurance and marketing our crops, this is one of those critical years.”

March 5, 2013

CME Globex and floor hours to be reduced for both CBOT grain and oilseed and KCBT markets

Official news release from CME Group:

CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will reduce grain and oilseed trading hours following comprehensive outreach to producers, commercial customers, traders and other industry participants who manage their risk in its markets. Pending CFTC review, trading in CBOT grain and oilseed and KCBT markets will be reduced from the current 21 hours, both on the floor and via its CME Globex electronic trading platform, for the Monday, April 8, 2013, trade date.

“Over the past several months, we have received significant customer feedback about the current CBOT grain trading hours,” said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments, CME Group. “As a result, we engaged our customers more formally through one-on-one conversations, focus groups and an online survey, which attracted more than 4,000 responses, to determine what hours best meet their needs. While there were varying opinions about what the modifications to hours should be, we believe these changes balance the needs of our diverse global customers based on their feedback.”

Beginning April 8, electronic and floor trading hours for CBOT Corn, Soybeans, Wheat, Soybean Meal, Soybean Oil, Rough Rice, Oats, and KCBT Wheat futures and options, plus all related CBOT and KCBT calendar spread options and inter-commodity spread options, will be amended as follows:

       Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT

       Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT

       Monday to Friday, floor and CME Globex trading from 8:30 a.m. to 1:15 p.m. CT

 Daily settlements for CME Globex and floor trading of these products will be based on market activity at or around 1:15 p.m. CT each day. Mini-Sized Corn, Mini-Sized Soybeans and Mini-Sized Wheat will continue to trade on CME Globex and on the floor until 1:45 p.m. CT.