Saturday, April 14, 2012

Tight Corn Stocks, Not Quality Concerns, Pushing Wheat as Feed

AgFax.Com - Your Online Ag News Source


The 2011/12 marketing year will end May 31, a point at which most analysts expect the U.S. Department of Agriculture (USDA) to make only minor changes to its year-end supply and demand estimates. USDA did make mostly small changes to wheat production, world trade and beginning stocks estimates in its monthly World Ag Supply and Demand Estimates (WASDE) released April 10. However, USDA sharply increased projections of wheat used for feed. Generally, a spike in feed use would indicate quality issues, but other market factors are driving the feed wheat use higher than ever this year.

Driving feed wheat demand is the very tight supply of corn. Despite five consecutive years of record corn production, projected 2011/12 world ending stocks are 2 percent lower than last year and 7 percent lower than the five-year average. USDA currently projects U.S. ending corn stocks down 29 percent in 2011/12 to 20.3 million metric tons (MMT), 46 percent below the five-year average of 37.8 MMT.

Historically, about 70 percent of total world corn consumption is utilized as feed. However, the increase in total demand for corn, including biofuels, limits the amount available this year for feed. The lower supply of corn for feed and relatively high corn prices has driven livestock owners to look to alternative feed grains.

The April WASDE indicated that USDA expects wheat will meet a large portion of the unmet feed demand. USDA increased projected world feed wheat use by 7.0 MMT in April to a record 138 MMT, 5 percent greater than the previous record set in 1990/91 and 22 percent greater than the five-year average. Tight corn supplies in China, the world’s largest feed grains consumer, have led to the current estimate of 19.5 MMT in feed wheat use this year, nearly doubling the previous record.




USDA also increased projected U.S. feed wheat use by 950,000 MT to 4.90 MMT, 37 percent above the five-year average. Kim Anderson, agricultural economist at Oklahoma State University, attributed the increase to the tight U.S. corn stocks. Anderson noted that the United States has plenty of wheat available for all uses, but demand dynamics may pull more of this high quality wheat into the feed market.

Looking at the futures market, the spread between wheat and corn has tightened significantly the last few years. Historically, the three major wheat futures markets have held a premium to the Chicago Board of Trade (CBOT) corn price. However, on multiple days in the last year the CBOT soft red winter (SRW) futures contract closed at a discount to CBOT corn. For example, the CBOT corn contract closed 8 cents higher than the CBOT May SRW contract on Wed. April 11. Analysts also are watching the spread between CBOT corn and Kansas City Board of Trade’s (KCBT) hard red winter (HRW) contract. To date, KCBT has never closed lower than CBOT corn, but KCBT closed Wednesday with an 8 cent premium to CBOT corn and the spread April has been as low in as 4 cents. The tightening of the price spreads makes wheat a more viable option for feed use.

Even though USDA lowered projected world wheat ending stocks in April by 3.3 MMT to 206 MMT, it will be the fourth largest carryover supply on record and 25 percent greater than the five-year average, if realized. In the United States, estimated ending stocks would decrease 870,000 MT, an 8 percent decline from last year, but still 22 percent above the five-year average. The United States continues to have an abundant supply of wheat available at competitive prices to meet the world’s demands.


Tags: , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    Corn Looking Good in Midwest; Soybeans Need Rain – AgFax7-30

    Cotton – Southwest Growers Seeing More Disease, Insects – AgFax7-30

    Cleveland on Cotton: Harvest Weather Dictates Market’s Next Big Move7-30

    Grain TV: Strong Ethanol Production Helps Boost Corn7-30

    DTN Livestock Close: Futures Swing Hard in Opposite Directions7-30

    DTN Cotton Close: Falls to Another New Contract Low7-30

    First U.S. Soybean Crop for the Year Harvested in South Texas7-30

    Doane Cotton Close: Triple-Digit Losses in Most Contracts7-30

    DTN Fertilizer Trends: Slow Season Expected for Fertilizer Booking7-30

    DTN Grain Close: Corn, Wheat Hold on to Gains7-30

    Cotton In Southeast – Stink Bugs Build But Plant Bugs, Aphids Linger – AgFax7-30

    Peanut Stocks and Processing: Utilization Up 2% from Last Year7-30

    Virginia Ag Expo, Lottsburg, Aug. 77-30

    AgFax Cotton Review: Possible Rise in Chinese Imports; Pigweed Problems in Texas7-30

    DTN Livestock Midday: Cattle Futures Sharply Higher7-30

    DTN Grain Midday: Corn, Soybean Trade Mixed7-30

    Endangered Species Act Reform Passes House — DTN7-30

    USDA Preps for Possible Invasion by Old World Bollworm — DTN7-30

    DTN Cotton Open: Ticks Quietly Just Above Unchanged7-30

    DTN Livestock Open: Mixed Start for Meat Futures7-30

    DTN Grain Open: Wheat Starts Fractionally Higher7-30

    Keith Good: C.O.O.L. Rules for Packaged Meat Upheld by Appeals Court7-30

    Keeping Farm Management in Line with Increasing Regulations – DTN7-29

    Mississippi: MSU Wild Hog Research Needs Foresters, Farmers7-29

    USDA: Weekly National Peanut Prices7-29

    AgFax Grain Review: Chinese Trade Issues Continue; Navy to Purchase 37M Gallons of Biofuels7-29

    AFB Grain-Soybean Close: Wheat Unable to Follow Corn, Soybeans Higher7-28

    AFB Cotton Close: Moves Higher in Narrow Range7-28

    AFB Rice Close: Futures Down Slightly7-28

    Crop Progress: Corn, Soybean Conditions Decline, Still at Historical Highs – DTN7-28

    DDGs: China Issues New Import Rules, U.S. Unlikely to Comply – DTN7-28

    Cattle: Minimizing the Risk of Scours — DTN7-28

    Good on Grain: Storing the 2014 Corn Crop7-28

    DTN Fertilizer Outlook: Domestic Ammonia Prices Down Slightly7-28

    Flint on Crops: Challenges for Farmers Keep Coming, Keep Changing7-28

    USDA Commentary: Weekly Cotton Markets, Weather by Region7-25

    Rose on Cotton: No Pleasure in this Market Made for Bears7-25

    Rice Market: U.S. Futures Decline as Global Prices Rise7-25

    Rice Crop: Harvest Begins Slowly in Louisiana and Texas7-25

    Rice Commentary – Rice Farmers Need to Consider a New Business Plan7-25

    Leave Your Guns at the House, Boys.7-25

    Rail Car Delays Causing Dread Among Elevator Operators – DTN7-25

    Catfish Production: Water Surface Acres at 63,700 Acres7-25

    USDA: Peanut Price Highlights7-25

    Arkansas: New iPhone App Simplifies Farmers’ Finances7-25

    Taking the Risk Out of Buying Used Equipment — DTN7-25

    North Carolina: Rediscovering Grain Sorghum — DTN7-25

    Peanuts: Worms Still Building In SE; Rains Boost West’s Crop – AgFax7-25

    Shurley on Cotton: Prices Try to Stabilize, Still Show Weakness7-25

    AgFax Wildlife Review: Wild Hogs Damaging Levees in Louisiana7-25

    Doane Cotton Close: Prices Break Out of Range Lower7-24

    Sunbelt Ag Events

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney