US government data released on Wednesday indicated prices for grains and soya will remain around record-high levels as demand from the food and fuel sectors holds strong, analysts said on Wednesday.
US grain traders and analysts were expecting the Chicago Board of Trade corn futures market to rally 5 to 10 cents per bushel on Wednesday, wheat 4 to 8 cents and soyabeans 10 to 15 cents per bushel. The US Department of Agriculture (USDA) in its April supply/demand report said the ending supply of US corn this year would total 1.283 billion bushels, below an average of analysts' estimates for 1.315 billion and below the government's outlook in March for 1.438 billion.
"It's definitely a supportive corn number," said Shawn McCambridge, analyst for Prudential Financial. Global corn stocks also were cut, by a million tonnes. There will be enough corn to meet demand this year but there are concerns about a possible shortage of corn in 2009 as the export, livestock and energy sectors keep gobbling up huge amounts and unstable weather threatens production.
"It's going to tighten up the old-crop balance sheet, which increases the necessity to plant every acre that's intended, and then some, for next year," he said. The USDA report gave no hint that overseas buyers were scaling back their purchases of US grains, despite the historically high prices. Indeed, USDA increased its outlook for exports of each crop by 50 million bushels, but it did trim by 100 million bushels it's outlook for this year's corn usage by the ethanol industry.
US farmers are in the early stages of the corn planting season but excessive wet weather is preventing active seedings, threatening to trim corn acreage and corn yields per acre.
USDA pegged this year's soya ending stocks at 160 million bushels, up slightly from an average of analysts' estimates for 156 million and above the forecast in March for 140 million. "Even though USDA found increased demand to go with the increased supplies (of soyabeans), we still end up with a higher ending stocks estimate. At best this is a neutral report for beans," said Jack Scoville, analyst with Price Futures Group. USDA increased global soya stocks by nearly 2.0 million tonnes.