Agriculture • USA – Grain market manipulators
USA – Grain market manipulators 25 May 2012
Brokers line up to cast doubt on US corn, soy data
Commentators from Goldman Sachs to the University of Illinois lined up to cast doubt on long-awaited forecasts in a benchmark US report, fuelling a reversal in soybeans’ gains of the last session.
The US Department of Agriculture on Thursday forecast a jump in US inventories of corn in 2012-13, helped by a yield upgraded to a record 166 bushels per acre, while soybean supplies were seen ending the season at their tightest in nearly half a century.
However, the extent of the supply shifts has attracted increasing scepticism, notably over a yield forecast which the USDA has, controversially, based on data excluding last year’s disappointing 147.2-bushels-per-acre figure.
"It is not clear why 2011 was not included in the trend analysis of yields," Darrel Good, agricultural economist at the University of Illinois, said, terming the USDA’s forecast "very aggressive".
‘Pretty darn optimistic’
Rabobank, flagging "significant uncertainty around yield expectations", said that the last, and only, time a comparable yield was achieved was three years ago when "harvested acreage was 11% lower, with less corn-on corn acreage planted".
The expansion of US corn sowings a 75-year high, as measured by farmers’ initial intentions, has extended plantings into less productive areas of the US, and involved successive corn sowings which are usually significantly less productive than when the grain is rotated with other crops.
At Teucrium Trading, a specialist in commodity-based exchange traded funds, Sal Gilbertie said he was hearing from farmers who were planting "corn on corn on corn" – three successive crops on the same fields.
"The USDA’s yield number is pretty darn optimistic," Mr Gilbertie told Agrimoney.com.
‘Downside to prices limited’
Goldman Sachs, also flagging the USDA’s exclusion of 2011 yield data, said it was sticking with an estimate of 160 bushels an acre, and by forecasts of Chicago’s near-term corn contract standing at $6.80 a bushel in three months’ time – significantly above values implied by the current futures curve.
While acknowledging that the data "will likely weigh on corn prices in the near term, we believe that further downside to prices from current levels will be limited until we get a better idea of summer growing conditions", Goldman said.
This outlook was echoed by Australia & New Zealand Bank analyst Paul Deane who, saying the USDA had "set the bar high on expectations for US corn yields", cautioned that such a result would require "benign July temperatures in the Midwest and adequate soil moistures into August".
As such, "grain prices will likely remain supported for the next four months", until such a benign outcome is ensured.
The comments helped corn futures post a relatively strong performance in Chicago on Friday compared with soybeans, which retreated as analysts questioned too the idea of US stocks of the oilseed falling to 145m bushels as of end of 2012-13.
This figure reflects an estimate of sowings falling to 73.9m acres, a figure taken from a survey of early planting intentions of farmers who are seen likely to have expanded soybean seeding plans since, encouraged by high prices of the oilseed.
"There is really nobody that feels that [73.9m-acre] number is valid at this time," Darrell Holaday at Country Futures said.
"Look for that number to go to 75m-77m acres. An extra 2m acres would add 80m bushels to total supply."
‘Already upping production estimates’
At Minneapolis-based broker Benson Quinn Commodities, Kim Rugel said: "The trade is already upping its soybean production estimates as prospect for increased acres looms large, with winter wheat maturity and harvest ahead of normal pace…
Statistics: Posted by yoda — Thu May 24, 2012 9:02 pm
View full post on opinions.caduceusx.com