Milling & Baking News - April 16, 2013 - 22

Grain Market Roundtable 

436 million bus, down 6% from the
same period a year ago.
The U.S.D.A. all-wheat stocks number was well above pre-report trade
estimates that averaged about 1,167
million bus.
Durum stocks on March 1 were 42.4
million bus, up 18% from 35.8 million
bus a year ago. Indicated disappearance during the December-February
period was 18.6 million bus, up 52%
from a year earlier.
The U.S. wheat carryover on June
1, 2013, was projected at 731 million
bus, up 2% from 716 million bus as the
March projection due to a projected
15-million-bu decrease in 2012-13 feed
and residual use more than offsetting a slight increase in seed use, the

March 1 wheat stocks
in million bus

1,500
1,200
900
600
300

‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13

Source: U.S. Department of Agriculture

U.S.D.A. said in its April 10 World
Agricultural Supply and Demand Estimates.
The U.S.D.A. 2013 wheat carryover
was on target with the average estimate of the trade
Projected 2012-13 wheat supply,
exports and domestic food use were
unchanged from the March numbers.
Feed and residual use was projected
at 360 million bus, down 15 million
bus from 375 million bus projected in
March but up 120% from 164 million
bus in 2011-12.
Total use of wheat in 2012-13 was
projected at 2,411 million bus, down
14 million bus from 2,425 million bus
in March but up 180 million bus, or
8%, from 2,231 million bus last year.
“We have enough wheat to transition from old crop to new crop,” Mr.
Meyers said, calling U.S. carryover
stocks above 700 million bus “fairly comfortable.” But he added he
thought the U.S.D.A.’s feed and residual number still was about 35 million
bus too high.
22 / April 16, 2013 Milling & Baking News

The average price of wheat paid to
farmers in 2012-13 was projected at
$7.70@7.90 a bu by the U.S.D.A compared with $7.65@7.95 a bu as the
March forecast but well above $7.24 a
bu in 2011-12.
Mr. Meyers said he sees Kansas
City September wheat futures prices
trading in the $6.25@6.65-a-bu range
during the summer, down considerably from around $7.55 last week.
Prices in Chicago will be about 40c a
bu below the K.C. price, and prices in
Minneapolis about 40c above the K.C.
price, he said. Pressure will come from
a combination of lower corn prices
as corn production recovers, larger
world wheat supplies and less export
demand, he said.
“Prices should trend lower if weather is okay,” Mr. Freed said, forecasting year-end wheat prices in Chicago
around $5.50 a bu.
While the U.S. wheat carryover
was near expectations, the U.S.D.A.’s
world wheat forecast was a surprise.
World wheat ending stocks for 201213 were projected at 182.26 million
tonnes, up 4 million tonnes from
178.23 million tonnes as projected in
March but down 9% from 199.38 million tonnes in 2011-12, the U.S.D.A.
said.
The trade will closely watch for
delays in plating the spring wheat
and durum crops in both the Upper Midwest and Canada, as well
as weather concerns across Europe,
Russia and Ukraine.
Corn sets tone for grains, oilseeds
Corn remained the leader in the
grain and oilseed markets, both in
forecast acres planted and in market
impact. It was the vastly larger-thanexpected March 1 corn stocks estimate
of 5,399 million bus that drove corn
futures prices to nine-month lows and
soybean futures to 10-month lows the
week following the March 28 release
of the March 1 Grain Stocks report.
Though down 10% from March 1,
2012, the U.S.D.A. corn number was
above the entire range of analysts’
pre-report forecasts and 7% above the
average of those forecasts.
“The difference between the
U.S.D.A.’s March 2013 (corn) stocks
estimate . . . and the average trade
guess was about 370 million bus, one
of the largest differences in the past 30
years,” Darrel Good, a University of
Illinois agricultural economist, said in
his Weekly Outlook after the report.

Some surmised that actual 2012
corn production may have been larger
than the U.S.D.A.’s January estimate
of 10,780 million bus. But the cause
for the miss was most likely related to
overly-optimistic use estimates, which
high prices clearly affected, and indirectly to difficulty in measuring onfarm storage of corn. The corn use picture was muddled even more because
of increased feeding of wheat this year,
but the March 1 wheat stocks number
also was well above expectations. The
U.S.D.A. said estimated corn use during the December 2012-February 2013
period was 2.63 billion bus, down
27%, or almost 1 billion bus, from the
same period a year earlier.
“Market participants form expectations for the quarterly stocks estimates based on the level of stocks at
the beginning of the quarter and a
projection of use during the quarter,”
Mr. Good said. “Exports and domestic processing uses of corn during the
quarter can be projected fairly closely.
Surprises in the U.S.D.A. estimates,
then, mean that feed and residual
use during the quarter deviated from
market expectations.
“The implied rate of feed and residual use of corn in the first half, and
particularly in the second quarter, of
the 2012-13 marketing year is quite
low,” Mr. Good said. “The slow rate
. . . does not seem consistent with
livestock numbers, a sharp reduction
in the production of distillers’ grains
and the implied negative feed and residual use of wheat during the same
six month period.”
Dan Basse, market research manager at AgResource Consulting
Group, Chicago, agreed that the
U.S.D.A.’s feed use numbers appeared low, saying he saw “no evidence” of less feed demand. He saw
tight old crop supplies as supportive to prices and suggested old crop
corn prices had bottomed, in part because of improved demand from the
ethanol sector.
In its March 28 Prospective Plantings report, the U.S.D.A. said farmers
indicated they intend to plant 97.3 million acres of corn in 2013, up slightly
from 97.2 million acres in 2012 and
near trade expectations that averaged
97.3 million acres.
“If realized, this will represent the
highest planted acreage in the United
States since 1936, when an estimated
102 million acres were planted,” the
U.S.D.A. said. “Expected returns for
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Milling & Baking News - April 16, 2013

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