What is in this article?:
- Corn, soybean prices searching for support
- Corn expectations more mixed
• A change in the trend of lower prices will require an additional supply shock or evidence that supplies have not been sufficiently rationed
• While corn and soybean prices have declined sharply from their peaks, prices are still very high by any measure.
• The pace at which prices transition to lower levels will be determined by a number of factors, beginning with the USDA’s October production forecasts.
Corn expectations more mixed
“For corn, expectations about crop size are more mixed, with yield expectations running from slightly below the September forecast to as much as 5 bushels above that forecast.
“The estimate of planted acres is expected to exceed the June estimate, but there is much more uncertainty about the estimate of acreage harvested for grain.
“The USDA has already indicated that the difference between planted acreage and acreage harvested for grain will be larger than normal, but the October report will provide more information about the likely magnitude of that difference.
“For both corn and soybeans, history suggests the October production forecasts will be reasonably close to the final estimates,” Good said.
For corn consumption, the pace of exports accelerated in September but remained below the rate needed to reach even the very small USDA forecast for the year.
“New export sales during September were extremely small so the magnitude of outstanding sales on Sept. 27 was 42 percent smaller than on the same date last year,” Good said.
“Weekly ethanol production during September averaged about 6 percent less than in September 2011, and was 9 percent less in the week that ended Sept. 28. Production is running slightly ahead of the pace implied by the USDA’s forecast of a 10 percent reduction in the use of corn for ethanol during the current marketing year,” he said.
According to Good, corn prices got a temporary boost from the USDA’s estimate of Sept. 1 corn stocks that seemed to imply a higher-than-expected rate of feeding. However, he said that there has been a growing understanding that the stocks estimate revealed little about the pace of corn feeding since so much new-crop corn was available before Sept. 1.
“As a whole, the current pace of corn consumption suggests the smaller supplies are being sufficiently rationed,” Good said.
For soybeans, the very rapid pace of export sales has been widely recognized, Good said.
“As of Sept. 27, U.S. export commitments accounted for nearly 82 percent of the USDA’s forecast of exports for the year, with China as the primary buyer,” Good said.
“The pace of sales obviously cannot be sustained but has not yet created concerns of shortages. The expectation of a large South American crop in 2013, ideas that China has already bought more than the usual share of its needs, and the possibility that the U.S. could import soybeans and/or soybean meal next summer if needed imply sufficient supplies,” Good said.
On the domestic side, the estimated size of the soybean crush in September is not yet available.
“While corn and soybean prices have declined sharply from their peaks, prices are still very high by any measure,” Good said.
“The pace at which prices transition to lower levels will be determined by a number of factors, beginning with the USDA’s October production forecasts.”