MarketView: August 14, 2013

Impacts on the Current Future’s Market Prices for Corn and Soybeans:

• Slightly tighter new crop supplies due to reduced new crop yields were reported in the USDA Supply & Demand Report which were below pre-report expectations.

• Weather

• Export sales

Some highlights from the Ag Canada Report Outlook for Principal Field Crops released on August 13, 2013:

In general World grain prices for the crop year 2013-14 are expected to decline due to increased production being supported by normal to above-normal growing conditions across the major grain producing countries. In Canada, the grain and oilseed prices are forecasted to average 10 to 20 percent lower than 2012-13 due to lower international prices. Canadian prices may receive some offsetting support from a weaker Canadian dollar.

Soybeans:

• The 2012-13, domestic crush is expected to rise to 8 year highs, exports are expected to set a new record and Chatham track prices are forecasted to average $533/tonne ($14.50/bushel)

• The 2013-14, planted area in Canada is estimated at a record 1.86 million hectares. This makes soybeans the 5th largest crop by area in Canada. The forecasted Chatham average soybean price is $420-460/tonne ($11.40 to $12.50 per bushel)

• World soybean production is forecasted to rise based on an expected record production in the United States, Brazil and Argentina (289 million tonnes, up from 285 million tonnes). World soybean carry-out stocks are forecast at a record 74 million tonnes which gives a stocks-to-use ratio of 21% for 2013-204 versus 19% for the 2012-13 crop year.

Corn:

• For 2012-13, Canadian corn exports are forecasted to increase to 1.2 million tonnes due to tight supplies in the U.S. and a very wide Ontario corn basis. The nearby Chatham in-store elevator price was record high for the past crop year because of steady total domestic use and strong US corn futures prices.

• The forecasted 2013-14, seeded area in Canada is for an increase of 3% from the previous record of 2012-13. The forecasted production is up 1% to 13.2 million tonnes based on the larger area and the return to average yields. Total supply is forecasted to increase 2%, total domestic use is forecasted to increase by 1%, exports are forecasted to decrease due to a recovery in U.S. corn production and lower world prices and the carryout stocks are forecast to increase to a new record of 2.4 million tonnes. With the potentially larger North American and world corn crop for 2013, the Chatham in-store elevator price is forecasted to decrease ($4.40 to $5.20 per bushel).

 

Disclaimer: This commentary is provided for information only and is not intended as advice