Milling & Baking News - April 14, 2015 - 25

Grain Market Roundtable

acres and durum also below the average of 1.73 million acres.
"Wheat was a minor surprise," Mr.
Meyers said. "I thought there would
be more durum acreage because of low
stocks in the United States and Canada."
Quality problems with the 2014 durum crop have been well documented
by millers, which has tended to support prices for milling quality supply.
The quality issues in the Upper Midwest and Canadian crops may have
been a factor in sharply higher desert
durum plantings in California and
Arizona this season, a durum miller
noted. Area in the two states totaled
185,000 acres, up 71% from a year earlier. Growers tend not to increase area
unless they have production contracted before planting, the miller said. The
desert crop typically is exported with
excess supply used locally for livestock feed, which draws a lower price.
Although all wheat planted area is
expected to be down about 1.5 million
acres from 2014, a record large crop
globally in 2014, ample global supplies and limited export potential due
to the strong dollar likely will pressure wheat prices, which also tend to
follow corn.
Mr. Meyers said he expects September Kansas City wheat futures to fall
below $5 a bu this summer, assuming
normal rainfall and a "decent" hard
red winter crop. Chicago September
soft red winter wheat prices could fall
into the $4.60 to $4.70 a bu range during the same period. Kansas City September wheat was trading near $5.75 a
bu and Chicago September near $5.30
a bu last week.
Steve Freed, vice-president of research, ADM Investor Services, Inc.,
Chicago, said he expects wheat prices
to remain near current levels unless
there is a problem with the U.S. hard
winter or hard spring crops, despite
the bearish export scenario.
"U.S. wheat exports are slow due to
competition from the E.U. and Black
Sea," Mr. Freed said. "North Africa
and Middle East demand has been
slow due to lower energy prices and
revenues."
A "wrinkle" in the global wheat
trade picture is a $35-per-tonne (about
$1 a bu) tax on Russian wheat exports
imposed earlier in the year in an effort
to control inflation in that country's
troubled economy. Russia has given
mixed signals about when it plans
to lift the tax. Mr. Meyers said a decision to lift the export tax July 1 could
have a significant impact on the wheat
market. Exports from Russia could
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surge this summer if the tax is lifted, he
said, which would be negative for U.S.
wheat exports that already were struggling in world markets because of the
strong dollar. Although it briefly rallied
futures prices, the tax never gave U.S.
exports the boost some had hoped.
Mr. Freed also noted farmer selling
of wheat has been slow. Grain merchandisers have said for some time
that farmers would hold the remainder of the 2014 hard red winter crop
until they have a better idea of how
their 2015 crop will fare. Spring wheat
growers, meanwhile, have tended to
hang on to a larger percentage of their
crop because spring wheat prices have
not been to their liking.
Wheat stored in all positions on
March 1 totaled 1,124 million bus, up
6% from 1,057 million bus on March
1, 2014, the U.S.D.A. said in its Grain
Stocks report. On-farm stocks of wheat
were 278.7 million bus, up 17% from
237.5 million bus a year ago, while offfarm stocks were 845.7 million bus, up
3% from 819.4 million bus in 2014. Indicated disappearance of all wheat during the December 2014-February 2015
period was 405 million bus, down 3%
from the same period a year earlier.
The U.S.D.A. all wheat stocks number was below pre-report trade expectations that averaged about 1,143 million bus.
Durum stocks on March 1 were 37.6
million bus, down 1% from 38.1 million
bus a year ago. On-farm durum stocks
were 16.2 million bus, down 22% from
a year earlier, while off-farm stocks
were 21.4 million bus, up 23%. Indicated disappearance during the December-February period was 6.43 million
bus, down 59% from a year earlier.
Corn plantings down; soybeans up
The U.S.D.A. in its Prospective

Plantings report indicated farmers
intend to plant 89.2 million acres of
corn in 2015, the least since 2010 and
1.4 million acres less than was planted in 2014. The U.S.D.A. forecast was
about 470,000 acres less than the average trade estimate. The U.S.D.A. also
reported farmers' intentions to plant a
record 84.6 million acres of soybeans,
close to a million more acres than the
record planted in 2014, but still almost
1.3 million acres less than average of
trade expectations.
The U.S.D.A. said increases in soybean area of 200,000 acres or more
were anticipated in Arkansas, Iowa
and Ohio, with the largest declines
expected in Kansas (200,000 acres) and
Nebraska (300,000 acres).
"The U.S.D.A. understated total
acres planted to corn and soybeans by
one to three million acres in the March
31 Prospective Plantings report," Mr.
Roose said. "Corn acres are close to accurate, but soybeans are likely to pick
up one to three million acres. This may
correct the fact that soybean acres in
the March 31 report were less than the
trade expected."
Mr. Meyers said that leading up to
the report, the trade had expected 3
million to 4 million fewer corn acres
and 3 million to 4 million more soybean acres, and that the surprise in
the report was how small the changes were. He said growers still could
plant 2 million to 3 million more acres
of soybeans than indicated by the
U.S.D.A. without significant switching
from corn because total planted area
indicated in the Prospective Plantings
report was down more than 2 million
acres from a year ago.
Steve Nicholson, vice-president,
Food & Agriculture Research & Advisory, Grains & Oilseeds, Rabo AgriFinance, said he wasn't surprised by

Crop plantings
in thousand acres
Corn

Soybeans

All wheat

100,000
85,000
70,000
55,000
40,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

Source: U.S. Department of Agriculture

*intentions in early March
Milling & Baking News

April 14, 2015 / 25

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Milling & Baking News - April 14, 2015

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