June 17, 2010
Less US corn available at close of 2009/10 MY
The USDA's ending stocks for the 2009 crop are lowered by 135 million bushels, and the USDA now thinks the US will have 1.6 billion bushels of corn in storage ahead of the 2010 corn harvest.
The carryout number is 100 million bushels lower than the average trade estimate. The USDA also lowered 2010-11 ending stocks to 1.573 billion bushels compared with 1.818 billion bushels in May.
Speaking at the Minneapolis Grain Exchange monthly crop call, Victor said ethanol production is expected to increase both in 2010 and in 2011.
''Corn for ethanol is working,'' Victor said. ''Cellulose for ethanol is not profitable yet.''
According to the USDA, US corn use for 2009-10 is 135 million bushels higher because corn food, seed and industrial use is raised by 150 million bushels. Corn use is also raised 5 million bushels for starch and 5 million bushels for glucose/dextrose production.
Expected feed and residual use is decreased 25 million bushels for the current marketing year. Part of the decrease is due to the increased availability of distillers grains.
''We have to get this economy healed with the US food preparation, food served - whether at the restaurant or home,'' said Victor. ''We have to see food demand increase.''
On the CME Group Exchange, the corn futures on June 11 closed with July at US$3.49; September at US$3.58; December at US$3.70; March 2011 at US$3.83 and May at US$3.92 per bushel.
Compared with prices on May 27, the July future was 23 cents lower; September was 24 cents lower; December was 22 cents lower; March was 22.5 cents lower, and May was 21 cents lower.
According to the CME Group website, traders are studying the weather and crop conditions for mid- to late-June.
There are also rumours of possible increased China demand for US corn.
The USDA's weekly export report on June 10 reported sales of 1.019 million tonnes (40 million bushels), considered a strong number.
Old crop sales now have to reach just 237,000 tonnes (9.3 million bushels) weekly to reach the USDA's export forecast for 2009-10.
Victor said he will not be surprised if China purchases 40-80 million bushels of corn, and one or two million tonnes of dried distillers grains with soluble (DDGS).
''You may see China overtake Mexico as the number one importer of US dried distillers grains with solubles,'' he added.
At one elevator in western Minnesota followed in this column, cash corn on June 11 was US$3 per bushel with a basis of 50 cents under. Compared with prices on May 27, the price was 27 cents lower, and the basis had widened by 5 cents.
The USDA's June Supply and Demand Report suggests an average 2009-10 farm price of US$3.45-3.65 per bushel.
Minnesota's corn crop was listed 92% good to excellent as of June 6. The national corn crop was rated 76% good to excellent.
''We had such a good planting pace for corn, and we're not going to pollinate the crop in the heat of summer,'' said Victor. ''We may have seen the lowest ending stocks number (that we will see for the 2010-11 marketing year) for corn.''
If growing conditions remain ideal, he expects the US could harvest an average of 170-173 bushels per acre.
''I don't see weather all that major of a threat for corn,'' Victor concluded.
