Milling & Baking News - April 14, 2015 - 27

Grain Market Roundtable

prices will automatically decline, especially if predictions come true that
producers in Southern states may
switch additional acres from corn
to soybeans or even sorghum after
March 1, as they grapple with sodden fields and a fast-closing planting
window ending in April in parts of the
South (compared with the third week
of May in more northern areas of the
Corn Belt).
"Given current wet-weather patterns in the Delta and Mid-South, the
trade will start to knock down the
89.2 million corn acres forecast in the
March 31 Prospective Plantings report," said Mike Zuzolo, president of
Global Commodity Analytics in Atchison, Kas. He said some of the very wet
acres in the Mississippi Delta could
end up in the prevent-plant category.
Corn planting in early April in states
such as Louisiana, Texas and Arkansas
was well behind average, with little
time available to catch up, Mr. Zuzolo
said. Further north, soil temperatures
remained too low in some areas for
much planting progress as of early
April. He said 2015 soybean acreage
could expand by 1.5 million acres because of last-minute changes in planting decisions that will require finding
a substitute for corn.
Nevertheless, Mr. Zuzolo acknowledged that farmers' planting decisions
often tend to favor the best-yielding
crop and that continues to be corn. He
predicted new-crop December corn
futures will trade from $3.75 to $3.90
a bu after planting is finished in May.
He sees November soybeans trading
at about $9.30 a bu after planting ends.
Strong dollar an export factor
Mr. Zuzolo said the dollar could
make a peak in mid-June as the Federal Reserve is forced to indicate if
it has concrete plans to start raising
U.S. interest rates in 2015. But, until
then, the dollar may continue to gain
strength, weakening U.S. agricultural
commodity prices, because of quantitative easing in Europe that has the
effect of weakening the Euro, which
makes European grain cheaper for foreign buyers.
Mr. Meyers said the strong dollar
has made the E.U. an "aggressive exporter of wheat," with sales still above
those of the United States, which was
unusual for this time of year.
On the supportive side, less expensive crude oil was seen stimulating domestic gasoline use and contributing to additional corn ethanol
consumption, even if ethanol prices
bakingbusiness.com / world-grain.com

U.S. wheat carryover down
7 million bus from March
WASHINGTON - The U.S. Department of Agriculture on April 9 forecast the carryover of wheat on
June 1, 2015, at 684 million bus, down 7 million bus, or 1%, from the March projection but up 94
million bus, or 16%, from 590 million bus in 2014. The adjustment was the result of lower exports
more than offset by lower imports and higher seed, feed and residual use in 2014-15.
The U.S.D.A. carryover number was below the average trade expectation of 690 million bus.
Imports in 2014-15 were forecast at 145 million bus, down 15 million bus from the March
forecast and down 24 million bus from 2013-14. Imports of durum were lowered 10 million bus
and of hard red spring wheat 5 million bus, the U.S.D.A. indicated. As a result, total wheat supply
in 2014-15 was lowered 15 million bus to 2,761 million bus. Beginning stocks at 590 million bus
and 2014 production at 2,026 million bus were unchanged from March.
Total wheat use in 2014-15 was forecast at 2,077 million bus, down 8 million bus from March
and down 354 million bus, or 15%, from 2,431 million bus in 2013-14. Domestic use was raised
12 million bus to 1,197 million bus as the result of a 2-million-bu increase in seed use, at 77 million bus, and a 10-million-bu increase in feed and residual, at 160 million bus. Food use of wheat
was unchanged from March at 960 million bus.
The feed and residual use was raised on higher disappearance during the December-February
and September-November periods indicated in the March 31 Grain Stocks report, the U.S.D.A. said.
Wheat exports in 2014-15 were forecast at 880 million bus, down 20 million bus, or 2%, from
March and down 296 million bus, or 25%, from 1,176 million bus in the prior year.
"The all wheat export projection is lowered 20 million bus on continued strong competition in
global markets," the U.S.D.A. said. "This would be the lowest export total since 2009-10."
The average price for wheat paid to farmers in 2014-15 was forecast at $6 to $6.10 a bu,
compared with $5.90 to $6.10 forecast in March and $6.87 in 2013-14.
The U.S.D.A. forecast 2014-15 carryover of corn on Sept. 1, 2015, at 1,827 million bus, up 50
million bus from the March projection and up 595 million bus, or 48%, from 1,232 million bus in
2013-14.
The only change in the U.S.D.A.'s corn numbers was a 50-million-bu reduction from March in
forecast feed and residual use, at 5,250 million bus, which still was up 214 million bus, or 4%,
from 5,036 million bus in 2013-14.
The change in feed and residual reflected lower December-February corn disappearance indicated in the Grain Stocks report, the U.S.D.A. said.
Soybean carryover on Sept. 1, 2015, was forecast at 370 million bus, down 15 million bus from
the March forecast but up 278 million bus, or about 300%, from 92 million bus in 2013-14.
The change reflected a 5-million-bu increase from March in forecast 2014-15 imports, at 30
million bus, more than offset by a 6-million-bu increase in seed use, at 98 million bus, and a
14-million-bu increase in residual, at 38 million bus. Domestic crushings were unchanged from
March at 1,795 million bus, as were exports, at 1,790 million bus.
The U.S.D.A. corn and soybean carryover numbers compared with the average trade estimate
of 1,851 million bus for corn and 371 million bus for soybeans. MBN
fall to break-even, some of the analysts said. Shipping costs were likely
to trend lower on improved railroad
performance and less-expensive fuel,
negating the need to build a freight
premium into commodity prices.
In its quarterly Grain Stocks report
the U.S.D.A. estimated an 11% hike in
domestic corn inventories as of March
1 compared with March 1, 2014, and a
34% increase in domestic soybean inventories.
The corn stocks number at 115 million bus above the average trade guess
was the biggest surprise in the Grain
Stocks report, Mr. Meyers said. It suggests the U.S.D.A. may have to reduce
the feed and residual use number in
the April World Agricultural Supply

and Demand Estimates report. The
March 1 soybean stocks number was
lower than what the U.S.D.A. 2014
soybean production estimate would
indicate, he said, suggesting last
year's soybean production may have
been overstated.
In addition to weather, the analysts suggested the value of the dollar would be key for grain markets in
coming months. Most thought the dollar had not yet peaked.
But first spring wheat and the
row crops need to be planted in major growing areas, with corn the first
major concern. Even with recent wet
weather, Mr. Nicholson noted: "It always gets planted." MBN
- Laura Lloyd and Ron Sterk
Milling & Baking News

April 14, 2015 / 27

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Milling & Baking News - April 14, 2015

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