Milling & Baking News - April 20, 2010 - 28

Roundtable 

expected to pull down domestic stocks
much if at all in 2010-11 because of the
sluggish demand.
The U.S.D.A. on April 12, on the
basis of a revised winter wheat plantings estimate and a survey of producers' spring growing intentions, projected area planted to all wheat in the
United States for harvest this year at
53,827,000 acres, down 5,306,000 acres,
or 9%, from 59,133,000 acres in 2009. If
the projection is realized, area planted
to all wheat in the United States this
year would be the smallest since 1970.
The recent five-year average all-wheatplanted area was 59,467,000 acres.
The U.S.D.A. estimate of the winter wheat area planted for harvest
this year was 37,698,000 acres, down
5,613,000 acres, or 13%, from 43,311,000
acres in 2009. The winter wheat
planted area also was the smallest
since 1970 and compared with the recent five-year average winter wheat
area at 43,123,000 acres.
The U.S.D.A.'s winter wheat planting
estimates for Illinois, Indiana, Missouri,
Nebraska and Ohio were record low.

The U.S.D.A. said U.S. producers intend to plant 13,906,000 acres to spring
wheat other than durum this year, up
638,000 acres, or 5%, from 13,268,000
acres in 2009. While up from 2009, the
intended other-spring wheat area in
2010 was below the recent five-year
average area of 13,932,000 acres.
In addition to encountering planting problems because of a delayed
row crop harvest and wet conditions
last fall, especially in key soft red
winter wheat states, many producers
turned to other crops that promised to
generate more income.
"Last year at harvest, wheat producers encountered a lot of discounts
for quality and protein," Mr. Freed
said. "I think farmers are getting some
pretty low prices for their wheat. You
can blame part of that on the weather,
but you need an export market to have
higher prices, and the export market is
just not strong.
"In its April WASDE, the U.S.D.A.
raised feed usage of wheat, but for
that to happen, wheat has to compete
with corn as a feed grain. Cash wheat

prices are almost down to levels
cheaper than corn in some areas."
Mr. Freed said in soft red winter
wheat areas where only 20% to 30% of
wheat was rated in good to excellent
condition, producers might decide to
tear up their wheat fields and plant $9
a bu soybeans.
"We haven't reached the point
where wheat prices are high enough
for a producer in the Midwest to make
as much money on wheat as he could
on corn and soybeans," he said.
Mr. Meyers pointed out many producers in the hard winter wheat states also
have explored options. He said there
are areas in Kansas and Texas where
producers can plant corn, soybeans and
cotton as well as wheat, and some producers there have switched from wheat
to one or more of those crops.
"Getting farmers to plant wheat
increasingly will be a problem given
more rapidly rising yields we see in
corn and soybeans compared with a
much more modest upward trend in
wheat yields," Mr. Meyers said.
In its first Crop Progress report of the

Soybeans: Large supply seen pressuring prices
KANSAS CITY - Forecast record high U.S. 2010 plantings and record
large 2009-10 South American production and global stocks are expected to pressure U.S. soybean prices the remainder of the year, according to the U.S. Department of Agriculture and analysts contacted
by Milling & Baking News.
"The world is awash in (soybean) supply," said Dan Basse, market research manager at AgResource Consulting Group in Chicago,
adding that it was only in the United States where soybean supplies were tight.
In its March 31 Prospective Plantings report, the U.S.D.A. said U.S.
farmers intend to plant a record 78.098 million acres of soybeans in
2010, up about 1% from the previous record in 2009. And in its April
9 World Agricultural Supply and Demand Estimates, the department
forecast record large 2009-10 soybean production in Brazil and Argentina of 121.5 million tonnes combined, up 1% from March and up
35% from 2008-09. It also forecast record large 2009-10 global soybean ending stocks of 62.96 million tonnes, up 4% from March and
up 47% from a year earlier due largely to recovery in South American
production that was reduced by drought last year.
Assuming "normal" weather for the U.S. growing season, Mr.
Basse expects November (new crop) soybean futures prices will trade
in a range of $7.75@8.25 a bu this fall, down about 15% to 20%
from last week's levels. And he expects 2010-11 U.S. soybean ending
stocks to surge to 475 million bus compared with a relatively tight
190 million bus forecast by the U.S.D.A. for 2009-10.
Paul Meyers, vice-president of commodity analysis at Connell Purchasing Services, Berkeley Heights, N.J., also expects weaker soybean
values and growing supplies, forecasting November futures prices
below $8.50 a bu this fall and soybean carryover that would "most
likely be over 300 million bus" next year. He said 2010-11 would be
a stocks rebuilding year in the United States as demand weakens
and global supply builds from the record large South American crops.
"The crop is made there," Mr. Meyers said of Brazil's soybean crop,
28 / April 20, 2010 Milling & Baking News

where the harvest was in its later stages, and of Argentina's crop,
where harvest was about 50% completed.
In its April 12 Oil Crops Outlook the U.S.D.A. said, "It appears U.S.
soybean prices may have peaked for the season at the end of 2009."
The preliminary average farm price of soybeans was $9.16 a bu in
March, down from a high of $9.80 in December and for the marketing
year to date that began Sept. 1, 2009.
Soybean use in the first quarter of the marketing year was record
high and continued strong in the second quarter, the U.S.D.A. said,
although demand is expected to drop off in the last half of 2009-10.
Strong exports to China and record high domestic soybean crush in
the first half of the marketing year were major contributors to tight
supplies and strong prices.
U.S. soybean exports are forecast record large in 2009-10, having
already exceeded last year's record by April 1, but the large global
supplies are expected to sharply curtail foreign demand for U.S. supply for the rest of the marketing year. Soybean oil and soybean meal
export sales also have been strong, up 64% and 122%, respectively,
for the marketing year through April 1, the U.S.D.A. said.
Contributing to the large crush has been reduced soybean oil yield
per bushel, Mr. Meyers said.
Large supplies of soybeans and other oilseeds also are expected to
pressure vegetable oil prices. Mr. Meyers forecast December soybean
oil futures prices to drop into the 34@35c a lb range this fall from
around 41c last week.
The loss of the blending credit and uncertainty about its reinstatement, along with high soybean oil prices have reduced demand for
soybean oil to make biodiesel, Mr. Meyers said, noting that the longer
the credit is absent, the more soybean oil stocks will remain large. He
also expects 2010-11 soybean oil exports to drop by a third or more
from this year.
Mr. Basse noted that the weaker commodity prices would bring relief to food processors and livestock producers in the coming year. MBN

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Milling & Baking News - April 20, 2010

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