Darrel Good
Darrel Good
appear calendar persist prices range settling trading
Prices now appear to be settling into a trading range that may persist into the first of the calendar year.
concerns continue corn crops daily decline demand driven dry exports fund growing higher ideas increase modestly net pace position prices provide raised sales season supportive weather wheat
Fundamentally, the increase in exports and export sales has been a supportive factor. Ideas that ethanol-driven demand for corn will continue to increase at a brisk pace and that U.S. corn acreage may decline modestly in 2006 also provide fundamental support. Dry weather has driven wheat prices higher and has raised concerns about the 2006 growing season for corn and other crops. Speculative demand for corn and other crops has also escalated, as evidenced by the daily tally of the net position of the fund traders.
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Most analysts are on record with expectations of a decline in corn planting intentions and an increase in intentions for soybeans. The debate generally centers on the magnitude of the changes. Acreage of spring-planted crops, however, could deviate from intentions due to escalating spring wheat prices; potential for abandoned hard red winter wheat acreage to be replanted to other crops; changes, if any, in price relationships of spring-planted crops; and spring weather conditions.
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However, if bird flu results in a permanent reduction in world poultry production, an increase in red meat production might eventually be required, resulting in increased feed consumption in the long term. Domestic demand prospects also remain strong due to increasing livestock production and expanding ethanol production. These developments should support increased corn consumption well beyond the 2005-06 marketing year.
continue markets provide react reports updated
Markets will continue to react to other factors, but these reports will provide updated fundamental information.
additional contrary farmers gain markets profits provides view
This is contrary to the view that the markets are inefficient and provides substantial opportunities for farmers to gain additional profits through marketing.
based current implies marketing price projection ratio relationship since year
Based on the relationship between the stocks-to-use ratio and price since 1998-99, a price of $2.51 implies a 2006-07 year-ending stocks-to-use ratio of 8.8 percent. In comparison, the current projection of the stocks-to-use ratio for the 2005-06 marketing year is 22.4 percent.
appeared direction errors forecast size study trend
There appeared to be no trend in the size or direction of forecast errors over the study period.
august believe billion coming crop estimated growing highest larger level nearly observers oil percent recent record reporting season since south stocks year
With the growing season coming to an end, most observers believe that the South American crop will be record large, with more uncertainty about the Argentine crop than the Brazilian crop. U.S. soybean oil stocks at the end of the most recent reporting month--January 2006--were estimated at 2.477 billion pounds, nearly 60 percent larger than stocks of a year ago. Stocks were at the highest level since August 2002.
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Those intentions are widespread geographically, with the exception of Minnesota and North Dakota, where intentions are unchanged and up 240,000 acres, respectively.
concerns conditions consistent drought forecasts increases moderate parts plains severe southern summer weather yield
The persistence of moderate to severe drought conditions in parts of Illinois, Iowa, and much of the southern Plains increases concerns about yield potential. As usual, forecasts of summer weather conditions are not consistent at this time.
cash central corn expected given high higher illinois magnitude marketing might next past price prices six sometime strength suggesting surplus surprising year
The price strength has been a little surprising given the magnitude of the surplus in U.S. corn inventories. However, over the past 32 years, the central Illinois cash price has never established a marketing year high in February, suggesting that even higher prices might be expected sometime over the next six months.
cash certainly concerns highs historical low persist price range spot weather
The range of $0.505 is at the low end of historical experience. New highs in the spot cash price are certainly possible, particularly if weather concerns persist into the spring.
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The production intentions of hog producers will be of particular interest. The report will reveal whether producers' modest expansion plans have changed as a result of an extended period of relatively low feed prices.