What Is Happening With Cereals And Grains

Articles
February 17, 2011

What Is Happening With Cereals And Grains

The latest projections of U.S. cereal and grain supplies were issued by USDA last week and summarized by The Food Institute. These latest projections indicate that supplies of some grains, such as wheat and feed corn, will almost certainly be down from a year ago at the end of the current season while others, such as rice will be on the up side.

The latest projections of U.S. cereal and grain supplies were issued by USDA last week and summarized by The Food Institute. These latest projections indicate that supplies of some grains, such as wheat and feed corn, will almost certainly be down from a year ago at the end of the current season while others, such as rice will be on the up side.

WHEAT
Let’s take a look at some of these important crops. U.S. wheat ending stocks are seen falling 17% from a year earlier.  Exports this year are expected to rise sharply from a year ago to 1.3 billion bushels compared to just 800 million 2009/10 because of increased demand due to poor crops from other foreign suppliers.

The marketing-year average price received by producers is projected at $5.60 to $5.80 per bushel 2011, up 10 cents from a month earlier and 19% higher than a year ago. USDA did note that continued gains in cash and futures prices boost the farm price outlook for the remainder the marketing year. 

CORN
U.S. feed corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed, and industrial use. The projected 675 million bushel ending stock figure would be 9% less than a year ago. This puts the stocks-to-use ratio at just five percent, the same as in 1995/96, the last time ending stocks fell to multi-year lows. and would be less than a one month supply.  Corn used for ethanol is projected at 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.

In the spring and summer of 1996, feed corn prices rose sharply to ration usage ahead of the harvest. The 2010/11 marketing-year average farm price is expected to follow a similar trend, with prices projected between $5.05 and 5.75 per bushel, up from $4.90 to $5.70 per bushel last month and 62% above the 2009/10 average price.

SOYBEAN
U.S. soybean supply and use projections for 2010/11 are unchanged this month, leaving ending stocks at 140 million bushels. Although soybean export shipments are only modestly ahead of last year’s pace, record sales through the first five months of the marketing year are expected to result in stronger gains in the second half of the marketing year. Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave U.S. soybean crush well-below 2009/10 levels. Soybean oil exports are increased to 2.8 billion-lbs. reflecting continued strong export sales. Although soybean oil used for biodiesel during the first quarter of the marketing year was the lowest in six years, biodiesel production is expected to accelerate due to the 2011 mandate and the return of the $1.00 per gallon blending credit. The U.S. season-average soybean price range for 2010/11 is projected at $11.20 to $12.20 per bushel, unchanged from last month but still up 27% from a year ago.

RICE
No changes were made on the supply side of the U.S. 2010/11 rice supply and use balance sheet. A reduction in the export projection is due primarily to the slower-than-expected pace of sales and shipments to date to Central America, Venezuela, and Sub-Saharan Africa. The decrease in the export forecast resulted in an increase in ending stocks of 1.0 million to 52.8 million, the largest stocks since 1985/86.

The 2010/11 season-average price is projected at $10.75 to $11.25. That’s 12% less than the 2009/10 average price.

The Food Institute will be following develop[ments in its daily e-mail updates and the weekly Food Institute Report. To find out more go www.foodinstitute.com.