Milling & Baking News - August 24, 2010 - 24

Grain Market Roundtable 

exports this year were forecast to be
the largest since 1995-96.
Even with the larger export forecast, U.S. wheat supplies in 201011 were viewed as ample with the
carryover of wheat on June 1, 2011,
forecast at 952 million bus, down 21
million bus from 973 million bus in
2010, but with the exception of that
year, the largest year-ending U.S.
wheat inventory since 1988.

Mr. Freed noted, "From the moment Russia announced the export
ban on Aug. 5, all the known bullish news was trading in the market,
and prices retreated." In the case of
the Chicago December wheat future,
prices dropped from an Aug. 6 high of
$8.68 a bu to a low on Aug. 17 of $6.82
a bu, an astounding $1.86 a bu plunge.
In the same timeframe, December futures dropped $1.45 a bu in Kansas

City and $1.47 a bu in Minneapolis.
But the Russian story was far
from over.
"Indications were the Russian
grain crop may end up being smaller than when they announced the
ban," Mr. Meyers said. "Some suggest Russia may not export any more
wheat this crop year." Mr. Meyers
also noted Russia is a low-price
seller of wheat, and the country's

Prices remain strong despite record large corn, soybean crops
KANSAS CITY - Despite the prospect of record-large U.S. corn
and soybean crops this year, prices of both have held up remarkably well, mainly on a strong export outlook and spillover support from surprisingly strong wheat prices.
While analysts had mixed ideas about corn and soybean
production levels and price direction for the rest of 2010, they
agreed supplies would be adequate to ample for both.
The U.S. Department of Agriculture on Aug. 12 projected U.S.
corn production this year at 13,365 million bus, up 2% from
13,110 million bus in 2009, which was the previous record.
Based on Aug. 1 conditions, the average corn yield was forecast
at a record 165 bus an acre. Soybean production was forecast at

3,433 million bus, up 2% from 3,359 million bus last year, which
also was the previous record. Soybean yield was forecast at 44
bus an acre, equal to the 2009 record.
"There's no shortage of soybeans," said Dan Basse, market
research director at Ag Resource Consulting Group in Chicago.
In fact, Mr. Basse expected the soybean crop may be larger than
the U.S.D.A.'s August forecast. But strong export demand, mainly
from China, may keep soybean prices around $10.50 a bu into
the fall, Mr. Basse suggested.
"The question is, will it continue," he said of the Chinese buying.
The U.S.D.A. on Aug. 12 projected U.S. 2010-11 soybean exports
at 1,435 million bus, up 65 million bus, or 5%, from its July forecast
but down 35 million bus, or 2%, from 1,470 million bus in 2009-10.
Paul Meyers, vice-president, commodity analysis, Connell
and Company, Berkeley Heights, N.J., was less confident about
the size of the soybean crop because of dryness in several
24 / August 24, 2010 Milling & Baking News

southern states and parts of the eastern Corn Belt.
The carryover of U.S. soybeans on Sept. 1, 2011, was projected
by the U.S.D.A. at 360 million bus, unchanged from its July forecast but up 200 million bus, or 125%, from 160 million bus estimated for Sept. 1, 2010. Global 2010-11 soybean ending stocks
were projected by the U.S.D.A. at 64.73 million tonnes, down
3% from 67.76 million tonnes projected in July but up 2% from
63.52 million tonnes this year.
Global supplies from large stocks in South America after record production in 2009-10, prospects of near record production
next year in that region and record U.S. 2010 production will
pressure prices, Mr. Meyers suggested. He said he expects November soybean futures to drop to the $9.25@9.50 a bu range,
down about 10% from current levels.
The analysts also had differing views of yield trends for both
crops. Mr. Basse said he thinks the U.S.D.A. forecast corn yield
was too high and might decline as the crop progresses, even
though development has been ahead of normal in many areas.
While forecasting a fall corn price will be like aiming at "a moving target" for several more weeks, Mr. Basse said he wouldn't
rule out $5 corn in mid-September. He also suggested that if the
corn crop comes in below expectations, rising corn prices may
pull soybean prices to $11 a bu.
Mr. Meyers, on the other hand, expects corn yields may move
above the U.S.D.A. forecast to an even higher record since the
main concern about hot weather has passed. A large crop and
plentiful supplies may push December corn futures prices down to
the $3.70@3.80 a bu range, he suggested. September and December corn futures last week were trading around $4.15@4.30 a bu.
Recent high corn prices may have hurt demand, Mr. Meyers
said. He forecast the Sept. 1, 2010, U.S. corn carryover at 1,500
million bus, and the 2011 carryover at 1,460 million bus, compared with the latest U.S.D.A. projections of 1,426 million bus
and 1,312 million bus, respectively.
Mr. Meyers suggested the trade will have to wait until the Oct.
8 U.S.D.A. Crop Production report for a good indication of 2010
U.S. corn and soybean production because the harvests will not be
far enough advanced when the next report comes out on Sept. 10.
Current strong prices may have a significant effect on 2011
planting intentions, Mr. Meyers said.
"Prices will encourage planting of wheat," Mr. Meyers said,
"but we don't need more wheat." Instead, there needs to be
about 3 million more acres of corn in 2011, which mostly likely
will have to come from area currently planted to soybeans, he
suggested. Soybean plantings in 2011 may fall 5 million acres,
Mr. Meyers said, with some area also lost to wheat. MBN

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Milling & Baking News - August 24, 2010

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