World Grain - May 2013 - 36

FEATURE

Larger supplies,

lower prices
L

arger-than-expected March 1 stocks of corn, wheat and
soybeans signiﬁcantly pressured grain and oilseed futures
prices after the U.S. Department of Agriculture (USDA)
released its quarterly Grain Stocks and annual Prospective
Plantings reports on March 28. While most plantings numbers
came in near the average of pre-report trade expectations, all of
the stocks numbers, and especially corn, caught the trade by surprise. About two weeks later, those stocks numbers inﬂuenced
the April 10 World Agricultural Supply and Demand Estimates
in the form of revised carryover and use forecasts, although the
more surprising numbers then were seen in the world numbers
from the USDA, which also were mostly bearish.
“The USDA stocks report was bearish and the biggest market miss ever,” Steve Freed, vice-president of research, ADM
Investor Services, Inc., said.
By the market close on Monday, April 1, nearby May corn
futures had plunged 93¢ a bushel, or about 13%, in the two
trading sessions since the report, to a nine-month low of
$6.42¼ a bushel.
In the same two sessions, nearby wheat futures tumbled
about 70¢ a bushel in Chicago, more than 60¢ in Kansas City
and about 48¢ in Minneapolis, while nearby soybean futures
fell about 60¢ a bushel.
While corn continues to lead the grain and soy complex markets overall, since late March, wheat has been awash in marketmoving news and rumors including large sales to China, improved export demand overall, ongoing drought, lingering cold,
excess moisture and, of course, spring weather, which, like last
year and most years, will be a key unknown factor.
Despite the varied market inﬂuences, most but not all ana36

by Ron Sterk and Laura Lloyd

Barring an unforeseen weather
event, experts agree that corn,
wheat and soybean prices should
drop in the coming months
lysts expected lower prices in the months ahead as values continue to decline from last summer’s highs, mostly the result
of larger-than-expected stocks and anticipation of large new
crop supplies, although tight old crop supplies of corn and
soybeans will support prices nearby. Of course, it all depends
on improved or more “normal” weather.
Drew Lerner, president at World Weather, Inc., Overland
Park, Kansas, U.S., said in the U.S., the eastern Corn Belt
and states as far west as Missouri and Iowa should return to
more normal conditions, the Delta appeared poised for more
favorable weather conditions and only the High Plains wheat
region was likely to remain overly dry.
Lerner characterized prospective 2013 weather patterns as a
return to “quasi-normal conditions.”
This year and last year seemingly couldn’t be more different. The 2012 season was characterized by two major weather
“events,” the warm early spring and the late drought.
In contrast, early in the 2013 season, there appeared to
be no single deﬁning market feature but rather a conglomMay 2013 / World Grain / www.World-Grain.com
http://www.World-Grain.com
World Grain - May 2013

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