US Market Outlook

[charliep]

Attended a US market outlook last week.

Lots of uncertainty on the overall economic front but agriculture (crops anyway) generally optimistic. China factor and their policies are something that has potential to be a major market mover.

Futures rice ranges (old and new crop) from the conference.

Soybeans old crop - $12.75 to $14.25/bu. New crop similar range. El nina south america? US acreage 2011?

Soybean oil - 52 to 56 cents/lb old and new crop. US policy around bio diesel - will bio diesel credit get renewed?

Wheat (MGEX) - Old crop $6.75 to $8/bu range. New crop $6.75 to $7.75/bu. Even with issues in Russia, Ukraine, Canada, etc., world wheat situation not as tight as other crops (not even close to 2007/08). Will be tied to corn although wheat still not showing up in rations in the US. Bigger US exports forecast but a relatively slow pace to date.

Corn - Old crop - $5.40 to $6.40/bu range. New crop $4.60 to $6/bu. Tight US S & D. Battle for acres with soybeans 2011.

Assuming you can get your crop in the ground (a challenge for many), 2011 is promising to be a very good year price wise.

[bucket]

charliep

As on other threads where is the cwb on prices for the 2011 crop?

The cwb has feed to sell this and are currently using their boyscout attitude to sell poorer quality to our customers. Watch Ward's video.

The same thing will happen next year. Why?

If you are signing $11.00 canola, there is a pretty good chance you are going to chase that crop to the bin.

If the cwb comes out with another $2.00 initial or a shitty PRO,farmers are going to put that crop in last and take the feed wheat price from the ethanol plant.

Things do look good. The chinese are going to force the market down and then step in again to buy, therefore creating a major shortage and prices will move higher.

[charliep]

Actually in the US and perhaps happily on my part, the CWB was never mentioned. The only way Canada was relavent was participant in the market. Using wheat as an example and new crop, Canada is 25 MMT production out of a very early forecast of about 675 MMT world crop and likely about 15 MMT exports out of world trade of 120 MMT.

[charliep]

A good presentation on China at the conference. Contrary to your comment, they are a major factor driving the market higher now. Port and shipping capacity in the US are pretty much fully utilized trying to fill Chinese soybean demand ahead of South American crop availability. Corn and wheat exports are both lagging.

Will highlight again that China policy around corn is something that will have to be followed carefully. More meat in Chinese diets equals more livestock equals more feedgrain consumption. The Chinese government is trying to slow or cutback on non livestock feed uses of corn (eg. ethanol). They are also working to improve productivity of their corn. Average Chinese corn yields are about 84 bu/acre versus US trend yields on corn of about 160 bu/acre. For what it is worth, average wheat yields in China are about 72 bu/acre and soybeans about 24 bu/acre.