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More bearish news for grain markets

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More bearish news for grain markets
News out of the US indicate high yields expected for the harvest, including the second largest corn production level in US history.  On the soybean side, yields are projected to be down yet the crop could be the fourth largest in history at just under three billion bushels.
 


October 16, 2008
By Delta Farm Press

Topics

October 15, 2008

Economic struggles in the U.S. and world financial markets and a bearish crop report have taken center stage in the grain markets, according to Brian Hoops, market analyst with Midwest Market Solutions, speaking at the Minneapolis Grain Exchange press briefing on USDA’s Oct. 10 crop production report and supply and demand estimates.

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The October report is the first grain report of the year based on actual ear and pod counts. It will be followed in November by reports based on harvesting data from producer surveys.


USDA pegged U.S. corn production at 12.2 billion bushels, which would be the second largest production in U.S. history. Yield, at 154 bushels, is an increase from September of 1.7 bushels per acre, and 2.9 bushels better than a year ago.


According to Hoops, parts of northern Illinois and most of Iowa are experiencing some of the best corn and soybean yields they’ve had in several years.


A piece of good news is that even with the large crop, “we are not producing enough to meet total usage, estimated by USDA at 12.685 billion bushels,” Hoops said.


But there are signs that the financial crisis could start to weigh on that demand. “The bad news is that USDA also dropped the average price forecast for corn significantly due to prices falling substantially and to expectations that demand starts to decrease in 2008-09.”


USDA’s October forecast for soybean production would be the fourth largest crop in history at 2.983 billion bushels, “which is considered a little bearish on the surface because it was larger than what the trade had anticipated,” Hoops said. “Average yield is actually down from last month and 2.2 bushels lower than 2007. So USDA is recognizing some crop problems with the crop itself. However, they did increase harvested acreage from last month by 3 percent.”


Meanwhile, ending stocks for soybeans moved higher than a year ago and last month. “Last month, we were looking at 135 million bushels of ending stocks, which is a very tight number. USDA found more bushels than expected in the quarterly stocks report, which gives us a substantially larger supply number of 220 million bushels.”


To view the full article, go to:
 
deltafarmpress.com/corn/grain-markets-1014/