Two words from US commodity trader: Grow Corn
By Top Crop Manager
March 10, 2010 -Corn will continue to be king, according to Cal Whewell, a well-known and perennial favourite at the Grain Farmers of Ontario annual meeting. Despite a large carryout coming into the spring of 2010, Whewell says the market will continue to push for corn, and for several reasons.
March 10, 2010
London, Ontario –Cal Whewell came to London, Ontario, on Tuesday, and he had one two-word message: Grow corn.
Whewell, a commodity trader with FC Stone in Perrysburg, Ohio, is a popular speaker at the Grain Farmers of Ontario annual meeting each year, and he did not disappoint at the 2010 edition. He talked about world grain and oilseed demand, and repeatedly referred to the US-backed agenda that calls for continued corn acres.
The 2009 harvest saw another record yield as well as record production in corn, with 79.6 million acres harvested, bringing in 13.2 billion bushels and a total availability of 14.8 billion bushels. And despite a carryout of 1.72 billion bushels from last fall, the US will likely plant something on the order of 90 million acres of corn in 2010, with an expected harvest of 82.4 million based on a lower average yield of 162 bushels per acre.
Whewell did caution that things could change with Wednesday’s release of the March USDA production report, but that figures were unlikely to differ that much from the numbers he presented on Tuesday.
Of particular note he said, the market is not fearful of large carryouts anymore, and for several reasons: six million acres of wheat ground that were not planted last fall together with two million acres of conservation land that has not been registered, are now available for corn or soybeans this spring. Yet fears over the sheer size of the South American soybean crop will have US growers shying away from planting more soybeans. In fact, Whewell said that the South American soybean crop is so immense this spring, that it will still affect world supply in September or October, the time when US growers are harvesting their crop.
Other factors that will influence plantings this spring include a US EPA ruling that may allow blends of 15 percent ethanol, up from the current 10 percent maximum. That decision is due in June.
In all, US demand for corn will range between 13.2 billion bushels to 13.4 billion, with ethanol production rising to chew through much of the available crop, without concerns for lower feed demand and lower exports.
On the wheat side, Whewell acknowledged that the world is using more wheat, but that it will not be getting more from the US. Planting estimates call for 52.9 million acres of wheat, down from 2009's 59.1 million acres, and with nearly 1.5 bushel per acre less in yield, production is likely to dip below two billion bushels, yet with nearly a billion bushel carryout, the total availability will be nearly three billion bushels with usage remaining fairly flat.
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