Food Business News - June 18, 2013 - 34

Market Insight

Mid-year

commodity outlook
Continued from Page 1
stocks of corn and wheat in
2014. Some corn, soybean and
wheat futures fell by double digits the day of the report. At the
same time, average cash price
ranges projected by the U.S.D.A.

were raised slightly from May
for all three commodities (as
well as other grains), although
2013-14 values still were well below average prices for 2012-13.
Nearby futures prices for
corn, soybeans and wheat (Chicago, Kansas City and Minneapolis) as of June 7 were up 7% to
12% from the same time a year
earlier, although all were down
from last summer’s highs and
all but soybeans were down
from the same week in 2011.
At the same time basis levels, and consequently cash
prices for all three commodities, remain historically strong
in many cases, reflecting last
year’s smaller crops and tight
old crop supplies in the case of
corn and soybeans and uncertainty about the 2013 crop in
the case of wheat.
New crop futures prices in
early June, meanwhile, reflect
2013 production ideas, with December 2013 corn futures about
$1 a bu below the July contract,
and November 2013 soybean
futures about $2 a bu below the
July, while forward wheat futures are mostly above nearby
July levels, again reflecting uncertainty and a forecast smaller
wheat crop from 2012.

Corn, soybeans and wheat
Corn, the major row crop in
the United States in terms of
acres planted and bushels produced, and usually the most
profitable for farmers, tends to
lead other crops that must adjust
in price to “fight” for acres that
may be switched to corn if prices
don’t stay competitive.
In its June 12 WASDE the
U.S.D.A. projected a record
large corn crop of 14,005 million bus in 2013, down 1% from
its initial projection in May but

FOODBUSINESS NEWS

Ingredient prices
mixed as supply
picture brightens
up 30% from 2012 and, if realized, more than 900 million
bus, or 7%, above the previous
record large crop of 13,092
million bus in 2009. Carryover
stocks of corn were projected
at 1,949 million bus on Sept. 1,
2014, the start of a new marketing year, 2½ times the amount
forecast for Sept. 1, 2013.
Consequently, the U.S.D.A. expects average prices paid to
farmers for corn to range from
$4.40@5.20 a bu in the 2013-14
marketing year, down about
30% from $6.75@7.15 forecast
for this year and down about
23% from $6.22 in 2011-12.
A similar scenario is expected
with soybeans, with the U.S.D.A.
projecting a record large crop of
3,390 million bus in 2013, up 12%
from 2012 and about 1% above
the current record of 3,359 million bus in 2009. The carryover
on Sept. 1, 2014, was projected
at 265 million bus, more than
twice the forecast level on
Sept. 1, 2013. The average price
was projected to range from
$9.75@11.75 a bu, down about
25% from the 2012-13 average
forecast at $14.35 and about 14%
below $12.50 in 2011-12.
Wheat is a bit different, having started its 2013-14 marketing year June 1, 2013. A price
direction similar to that of corn
and soybeans is expected, even
if the 2013 U.S. crop, projected
at 2,080 million bus, may be
down 8% from 2012, and June
1, 2014, carryover, projected at
659 million bus, may be down

12% from 2013. Wheat prices are
expected to be held in check by
a near record large world wheat
crop, which may limit export
potential, and the larger U.S.
corn crop, which may restrict
feed demand. Average cash
wheat prices were projected to
range from $6.25@7.55 a bu in
2013-14, down about 12% from
a record high $7.80 in 2012-13
and down about 5% from $7.24
in 2011-12.
Rice production was projected at 189.5 million cwts in 2013,
down 5% from 2012, while prices were projected to average
between $14.50@15.50 a cwt,
compared with $14.80@15 in
2012-13 and $14.50 in 2011-12.
Nearby rice futures prices have
been strong, recently trading
around $15.85 a cwt, up more
than 10% from a year ago and
5% above two years ago. Global
rice production was forecast
at a record high 479 million
tonnes in 2013-14.
Production of soybean meal,
the key protein ingredient in
most livestock and poultry rations, was projected at 40.2 million tons in 2013-14, up 2% from
the current year but down 2%
from 2011-12. The average price
was projected to range from
$290@330 a ton, down sharply
from $450 forecast for 2012-13
and from $394 in 2011-12.
The exception to the increasing production trend was
soybean oil with output seen
at 19,495,000 lbs in 2013-14,
down slightly from 19,590,000
lbs forecast for this year. The
average price was expected
to range between 47@51c a lb,
about even with 48.5c this year
but below 51.9c in 2011-12.
The U.S.D.A. report also indicated an increasing surplus of
2012-13 sugar and potentially

June 18, 2013

Food Business News - June 18, 2013

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