What is in this article?:
- Grain markets beginning shift
- Markets on weather-watch
- The tightness and low stocks-to-use ratios for oilseeds has been driven primarily by China, and by worldwide demand for feed grains and corn.
- While many factors can have an impact on the degree of the anticipated price declines, the biggest single factor — as always, will be the weather.
It’s a tale of two markets, says David Glidewell — a transition from very tight world supplies of corn and soybeans and extremely good demand to “more relaxed markets and more plentiful supplies.”
The tightness and low stocks-to-use ratios for oilseeds has been driven primarily by China, and by worldwide demand for feed grains and corn, he said at the Mississippi Farm Bureau Federation’s annual commodity conference at Jackson.
Glidewell, who is Mid-South regional manager for ADM at Marion, Ark., says if U.S. farmers plant the acreages this year that most analysts expect and have decent yields, and the expected “extremely large” South American soybean crop comes to market shortly with no problems, “we’ll begin moving to more plentiful supplies and an easing of the tight stocks-to-use ratios.”
“The obvious expectation of this transition is that we’ll see prices coming under pressure from current levels as we have more and more assurance that supplies are indeed increasing.”
While many factors can have an impact on the degree of the anticipated price declines, Glidwell says, “the biggest single factor — as always, every year — will be the weather.”
The growth of corn production in South America is becoming a significant factor in the market, he notes.
“Year-in, year-out Argentina has been one of the world’s largest corn producers, particularly for export. Brazil has been a relatively small corn producer, but last year they had a huge second crop, which tends to be planted mid- to late February following soybeans.
“That crop, unlike their first crop, which essentially burned up due to drought and heat, was a bin buster. That’s why the corn basis was so cheap last August and September and the U.S. couldn’t find bids for export. At the same time we had a huge Mid-South crop coming to harvest, the Brazilian second crop was being offered at a steep discount to the U.S. price.
The Brazilian second crop “is a big question mark as far as U.S. exporters are concerned,” Glidewell says.
“Will it be as big as last year? We don’t know. It hasn’t been planted yet. Conditions in northern Brazil are still somewhat wet, but longer-term that could bode well for a second crop. So, we have to keep an eye on this.”
Brazil’s second crop, along with the ramp-up in Argentine corn production, thanks to high world corn prices, has led to south America becoming “a rather significant producer of corn,” he says.
After hot, dry weather in the U.S. corn belt, the Southern Plains, and Texas took a heavy toll on last year’s corn crop, Glidewell says everyone is trying to get a handle on the weather for the 2013 growing season.