Grain, oilseed markets cool off
Prices for feed maize
and soya are settling
into a cold spell, but this
tons (MT) higher than in 2008/09.
Despite lower estimates for maize supplies for the marketing year, larger world
wheat stocks and slower trade for both
import and exports of coarse grains are
expected to continue exerting some downward pressure on maize prices. Prices
could, as a result, exhibit some volatility,
moving into a trough at year-end before
picking up in the first quarter of 2010.
For insight on India’s corn and
soy market, see
www.WATTAgnet.com/11959.html.
could be temporary.
What a ride it has been for agri commodities!
Once considered the dullest of plays,
the bullish year 2007 saw investors sit up
and take notice as prices of maize, wheat
and soya rose to record highs on the back
of poor harvests and strong competing
demands.
Quiet for now
Things have quietened down since
mid-2008 when prices rose to all-time
highs of over $6/bushel for maize and
$13.80 for soya beans. Maize prices slid
to $4 a year later, hovering at $3.50 in the
second half of last year and staying range-bound at about $3.20 towards the end of
the third quarter.
8% more soya
For oilseeds, a forecast of 429 million
MT, or an increase of almost 8% on year,
puts an ample figure to 2009/10 world
production.
In particular, soya bean production
rose in the US, Argentina and Paraguay.
Forecasts for increased supplies from the
US, Brazil and Argentina year-on-year have
also eased concerns of a tight supply situation in the old crop soya bean market.
As with maize, better-than-expected
production has eased the pressure from
soya bean prices into the harvest months,
which has since fallen to under $10/
Crop prices could exhibit some volatility, before
picking up in the first quarter of 2010.
As all eyes were on how harvests would
pan out in the key Northern Hemisphere regions, better than expected yields and output in the US, EU- 27, Ukraine and Canada
have partially offset the poorer harvests in
China and Russia to improve overall global
maize production. Such growing global
harvests shaved about $1/bushel off prices
between the second and third quarter.
The US Department of Agriculture’s
October World Agriculture Supply and
Demand report put current global maize
production at close to 1. 3 million metric
bushel from the second quarter’s high of
$11.30. The USDA reported the season-
average price range for soya bean higher
by 20 cents, at $8.20-$10.20 per bushel
in November, nudged up by a robust ex-
port demand coming from Asia, the EU-
27 and Russia.
Strong demand
Favourable maize prices are likely to
spur demand in the current crop marketing
year, which WASDE has estimated at 800
million MT for 2009/10. Besides a slight
increase in demand from the animal feed
and ethanol production, maize exports
worldwide are also expected to receive a
boost from the current price weakness.
Global demand for soya beans continues to be robust with estimates for
US exports of the 2009/10 crop looking
strong. Some have put exports at a high of
27 million MT in the first half of the marketing year, with good forward sales adding
evidence of brisk export demand.
This could nudge soya bean prices up
in January. Supplies could potentially tighten in early 2010 with prices easing only in
April when Latin American soya beans are
released on to the market.
On all counts, analysts feel that the outlook for soya is leaning towards a bearish
one. Jay O’Neil, a senior agriculture economist at Kansas State University suspects
that prices for both grains and oilseeds
were likely to bottom out sometime by the
mid-fourth quarter 2009.
“It’s hard to be bullish about maize or
soya beans at this time and buyers should
take advantage of excellent low prices,” he
says.
Maize doubts for China
Businesses everywhere affected by
the global economic crisis look at Asia for
signs of hope, the feed and livestock trade
not withstanding. Almost as if an answer to
that hope, China’s New Hope Group, the
