World Grain - April 2012 - 20

GRAINMARKETREVIEW
Maize prices
(Average prices received by U.S. farmers; dollars per bushel)

Coarse grains
Maize firm on supply deficit and weather concerns
by Chris Lyddon

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Maize has had a ﬁrm start to the year with the realization that the mar0 ket will be tight despite the incentives for farmers to increase plantings. The world maize market is expected to stay in deﬁcit in 2012-13 with production predicted at 880 million tonnes and demand at 884 million. Continued crop concerns in South America and reports of additional purchases by China were contributing to a bullish market tone. Source: U.S. Department of Agriculture “There are conﬂicting reports of the size of this year’s Chinese Corn ending stocks corn production and the levels of import needed,” Jonathan Lane, (in 1,000 tonnes) trading manager at U.K. trader Gleadell, said in a report on the mar150,000 ket. “Local analysts continue to work with corn numbers lower than the USDA for Argentina and Brazil, leading analysts to believe U.S. stocks will continue to tighten this year.” 120,000 He highlighted the importance of the USDA’s plantings report, not yet out at the time of writing, as did the U.S. Grains Council. 90,000 “Corn producers are again reminded this week that if USDA’s reports are considered moderately bullish, then the December 2012 (new crop) contract is likely to increase against the May and July 60,000 2012 (old crop) contracts, causing the old crop/new crop spreads to narrow,” it said. “Additionally, if the combination of USDA report 30,000 data and weather conditions paint a somewhat bearish scenario, then domestic and international buyers are likely to limit their summer 0 purchases. As a result, large speculators, who have been recently buying at relatively high prices, could be forced to reevaluate their newly established positions in nearby contracts. Once again, the old crop/new crop spread could narrow. “The market is currently offering a favorable marketing opportu- * Projected nity for corn producers who still have some old crop corn in storage. Source: U.S. Department of Agriculture Of course, there are other important factors that will inﬂuence corn soybean-to-corn price ratio above 2.3 — suggesting by our estimates prices this summer.” that soybeans could begin buying back acreage from corn in some The picture was little changed since the IGC issued its most recent marginal states,” the bank said in an analysis published March 14. Grain Market Report. “U.S. maize (corn) values remained ﬁrm, supIn its most recent World Agricultural Supply and Demand Estiported by reports of crop losses in South America and active export mates report, the USDA put global 2011-12 coarse grain supplies 1.6 interest for remaining old crop supplies, although forecasts of a further million tonnes higher “with production increases for Brazil corn and rise in U.S. plantings this spring added a bearish element,” it said. India corn and millet.” Britain’s Home Grown Cereals Authority (HGCA) noted that U.S. “Partly offsetting are reductions in sorghum output for India maize growers were facing some of the highest price levels ever at and Argentina and corn output for South Africa and Ecuador,” it the time when they were making their planting decisions. said. “Brazil corn production is raised 1 million tonnes on higher “As a result, U.S. forecasters are suggesting the highest U.S. expected area for the second crop, which is planted following maize area since 1944,” it said in a report on the market. “However, soybeans. India corn and millet production are raised 500,000 the big assumption here is that average weather conditions prevail at tonnes and 1.5 million tonnes, respectively, in line with the latest planting time. As a result, the new crop grain market will be reluctant government crop assessments.” to react to these forecasts until it can see the crop in the ground and ‘kind’ growing weather.” Chris Lyddon is World Grain’s European editor. Rabobank’s analysts wondered if high soybean prices might get He may be contacted at: chris.lyddon@ntlworld.com. some area back from corn. “Corn will need to continue to follow the developments in the soybean complex as 2012-13 U.S. acreage is We want to hear from you — Send comments and inquiries to worldgrain@sosland. com. For reprints of WG articles, e-mail reprints@sosland.com. by no means ﬁnalized, and as recent soybean bullishness has left the Jan-2011 Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan-2012 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12*
20 April 2012 / World Grain / www.World-Grain.com

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World Grain - April 2012

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