USDA loosens corn, soybean stocks
In its monthly World Ag Supply/Demand Estimates (WASDE) report issued Friday morning, USDA cut corn usage and raised U.S. corn ending stocks, both by 5 million bushels, a combination that will likely be bearish to the grain trade Friday.
"The 2011/12 season-average farm price for corn is projected 30 cents lower on each end of the range to $5.90 to $6.90 per bushel. Corn prices received by producers have been reported 40 to 50 cents per bushel below prevailing cash market bids reflecting apparent deliveries of grain that was forward priced below $6 per bushel ahead of planting this past spring," according to Friday's WASDE report. "Declines in futures prices since early November have also tempered the outlook for seasonal price gains over the coming months."
Soybean prices are also projected lower for the coming month on lower U.S. exports, "reflecting the slow pace of shipments and outstanding sales through November, and strong export cometition from South America," USDA says. Prices for soybeans for 2011/2012 are projected to fall within a $10.70/bushel-to-$12.70/bushel range, a 90-cent decline over last month's estimate.
Friday's numbers signal what could be a new dynamic for the grain trade. The world has responded to recent pricing spikes, and growing conditions have stabilized after a couple of tough years in some parts of the world. That means there are simply more alternatives for users seeking grain on the world market.
"What this report really does is highlight the competition in the world," says U.S. Commodities broker and grain analyst Don Roose. He highlights competition for corn from China, Argentina, South Africa and Brazil, among other nations, that are now competing for trade dollars with grain from the U.S. "I think we're really in a global world trade now."