USDA Acreage and Stocks Report

[charliep]

Just a note USDA released their acreage and stocks report today. Will let you get the numbers from other sources.

Corn acres a lot bigger than expected plus higher June 1 stocks will be the major factor. Corn price will be down. July is the main yield determining month but US corn in relatively good shape going into the month.

Also note US barley at 3.6 mln acres, down from 4.2 million acres in 2008 and smallest on record. This has potential to make the North American malt barley situation extremely interesting although will be offset on a world basis by a better crop in Europe.

[charliep]

http://www.usda.gov/nass/PUBS/TODAYRPT/acrg0609.pdf

http://www.usda.gov/nass/PUBS/TODAYRPT/grst0609.pdf

[charliep]

One thing that will have to be watched is how low corn prices go and from there, the impact on US corn imports into Southern Alberta.

Working backwards, feed barley delivered southern Alberta about $190/tonne. Assuming $10 to truck from a track unloading site, that puts a corn equivalent price at $180/tonne track (at a rail car/unload facility).

Cdn $180 translates into about USD $156/tonne or USD $3.95/bu. Basis (will have to get others to confirm) is likely US 75 to 80 cents/bushel. US corn futures to make US corn imports a viable alternative $3.15 to $3.20/range. CBT Sep/Dec corn futures locked limit down in the $3.55 to $3.70/bu range. Lots of other factors this provides a general idea of corn competitiveness in southern Alberta.

[bucket]

Does the current weather patterns, seeding dates, crop development and supply/demand impact prices?

In my way of thinking the current prices will not ration current or future demand. In other words, prices for our crops are still too low.

The current drought from saskatoon, edmonton to calgary has already taken 5 million tonnes from the cwb export program. Factor in the argentina disaster and someone is not looking at the big picture.

Or do I have the wrong glasses on?

My two cents worth.

[Fransisco]

There are a whole host of outside issues to consider as well. Stock Market, dollar, oil etc.

Today the market seems to be trading the report, tomorrow fundamentals may be completely out the window again.

[charliep]

Some nervousness among anyone who has forward contracted crop and now is unsure of yields. Is the current decline in prices a time to watch the market for options strategies? Buy a call as a protection against the market heading higher during July?

[Zaphod]

Maybe the soybeans haven't rationed much demand yet, but corn sure has. That's why the stocks were higher than expected. The drop in the livestock numbers and closing of ethanol plants is part of the rationing. Even in the beans, the biodiesel plants have sure backed away.

The index funds are back into commodities and continue to build long positions. That's the reason for the strength in prices. The problem is that the commercial demand is slowing down and can't keep up. Something will have to give.