The expected record US corn crop is combining with other feed grains to look likely to produce a record feed grain crop. The USDA predicting a 5% increase on last year. While the US corn crop is driving 80% of this increase, Mexico, Brazil & Ukraine will also contribute.
This comes at a time when global feed demand has taken a hit with the African Swine Fever wiping out around 70 mill tonne of demand. Adding to this, CV-19 restrictions are impacting gasoline demand, particularly in the US where corn-based ethanol is mandated into the mix.
The upshot is that low prices are expected to continue into next year, with countries who have had their currency devalue against the USD less impacted. This will likely maintain high levels of plantings in these countries despite the lower prices.
Domestically ABARES has lifted the outlook for wheat by 25% from last month, aiming now at a wheat crop of 26.7 mill tonnes, while barley is expected to be up 17% year on year to 10.6 mill tonnes.
All this positive news for production is weighing on prices, with the ASX Jan 2021 contract easing below the $300 mark to $297, while the US CME Dec 2020 contract after testing the 535-cent mark also pulled back 20 cents per bushel to 515 cents.
Domestic delivered prices continued to ease as we move closer to “new crop” pricing and buyers’ seemingly content anticipating a significant export surplus for the coming harvest. Despite the BOM changing their prediction of median rainfall for the winter, many grain regions are comfortable for now with soil moisture levels, and with forecast showers in the week ahead, are daring to feel optimistic about production.
Demand & supply heading for a mismatch
Next week
The widespread frosts across eastern Australia continued making the prospect of some (any?) rain slightly more urgent.
I am regularly reminded by experienced grain producers that “it’s not in the bin until it’s in the bin”, however, the prospect for a large crop is in place, with a couple of key rain events needed in late winter and spring to create a year to remember.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: USDA, Mecardo
Categories
Changes to local wheat forecasts crunching basis
Last week we looked at the Australian Bureau of Agricultural and Resource Economics and Sciences Crop Report, noting the strong growth in the forecast for
Russia, USDA and a Rock wall
Picture if you will, a rock climber, gradually, step by step, grasp by grasp, pulling themselves up the face of a sheer rock wall. This
Contrasting crop production
The seasons in the north and south couldn’t be more different in terms of rainfall and crop progression. While somewhat overshadowed by market movements, the
China’s canola curve ball
The wheat market has enjoyed something of a bounce this week. Having briefly touched multi-year lows of 525c/bu for the Dec ’24 contract last week,
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.