July 12, 2010

USDA's Supply and Demand report last Friday (July 9) increased soy production estimates by 35 million bushels and boosted wheat production by 2%.

The USDA lowered corn production by 125 million bushels but is still forecasting a 13.25 billion-bushel crop, and USDA also pegged the 2010 corn carry over number at 1.37 billion bushel higher than market expectations. The report pegged soy stocks at 175 million bushels, five million above expectations.

Extension Ag economist Dr Chris Hurt says, "This is about as much price increase as we are going to see on corn, soy and wheat." He adds that the market will begin to assume that the crop is not going to get any smaller and, if the weather continues to be good, forecast of yields will likely increase and this is what will pressure prices.

Following the June acreage report, most analysts said the bottom was in on market prices. Hurt says the top may also be in and we will now see a plateauing of prices and possibly a decrease in prices as summer comes in. He does not anticipate any major jumps in demand, with livestock number remaining flat and with exports and ethanol little changed.

He recommends that corn and soy producers look at locking in prices at current levels. Most of the corn is moving through pollination nicely in mid-July. Hurt indicated there are still some unanswered questions about the soy crop and there could be some pricing opportunities for soy as we move into August and September.

As for wheat, Hurt sees wheat prices moving lower. Word from USDA that production would hit 2.216 billion bushels but ending stocks for 2010/11 increase by 102 million bushels due to increased area, yields, and carry in. The ending stocks of US wheat remain at 23-year highs. Hurt said that while Indiana acreage and wheat yields were down, prices will move lower from now on and there will be struggling on prices of wheat. He recommends that producers sell wheat now.