Price forecasts look exceptional
As fall has turned to winter, the one certainty of the harvest, at least in the eastern half of the continent, is that high commodity prices have combined with record or near-record crops in many regions. And according to many forecasts, the numbers are going to continue climbing, at least in the short-term.
December 22, 2010 By Top Crop Manager/BrownfieldAgNews/Winnipeg Free Press
Dec. 22, 2010 –Reports are coming in from across the agri-food and agri-business sector, including BrownfieldAgNews, and the short- and possibly long-term outlooks are nothing short of brilliant. After years of struggling with low commodity prices, farmers across North America are looking at the potential for sustained higher prices.
In the eastern half of the continent, farmers are now basking in the glow of high commodity prices for corn, soybeans and wheat, bolstered by above-average yields. Yet despite those high production levels, the world outlook indicates that stocks are tightening and for the time being, there will be supply limitations in places like the Black Sea region of Russia, the Ukraine and Kazakhstan, which are also being challenged with late plantings of winter wheat. As these conditions unfold, the forecast for prices indicates an upward trend.
According to BrownfieldAgNews, corn hit a new two-year high late during the week of December 13th, pushed by hot and dry conditions in Argentina, where the crop is at pollination, with any resulting impact on supply likely to raise demand for US corn. As for pricing, forecasts for the 2010 fourth quarter for call for $5.50 (US) per bushel for corn, with a high of $6.00 projected for the first quarter of 2011.
And just as the Russian wheat scenario is influencing pricing in that commodity, corn’s price will be further influenced by China’s move to industrialize its livestock sector, particularly in hogs. That will push higher demands on corn exports, particularly from the US.
On the soybean side, similar weather-related concerns in South America are driving prices higher, up to a forecast of $12.15 (US) per bushel for the 2010 fourth quarter, and as high as $13.00 per bushel in the first quarter of 2011.
Of the big three in the eastern half of the province, wheat is the one feeling the greatest impact from the situation in the Black Sea countries. Russia may have to extend its ban on wheat exports beyond June 2011 if production in the three countries does not expand to recoup production losses from the drought in 2010. This is one of the key questions regarding volatility of world cereal stocks: Russia is equally capable of having a record harvest, as it is to be influenced by the vagaries of weather.
Canola prices were not mentioned in the breakdowns from news sources like Brownfield, however Winnipeg’s closing prices on December 21st, indicated the same upward trend, with January deliveries up $2.80 (CA) to $569.40, while March was $2.00 higher to $576.40 and May ’11 deliveries $0.70 higher to $579.30.