World feed grains to plummet

Feed grain production worldwide is seen to significantly drop to 23 million tonnes as stock markets continue to assert major influence over grain, oilseed and fibre market prices.

According to the US Department of Agriculture, planting delays are expected to reduce yields while soy potential is yet to be assessed due to unfinished planting.

Hence, world food production must double before 2030 to keep up with demand, says the USDA.

Fuel consumption is expected to exceed drilling capacity before that time.

The USDA also anticipated pork exports to increase substantially which will also increase feed grain demand. It takes about 10 pounds of grain to produce 1 pound of pork.

The National Weather Service reports an El Niño pattern developing in the Pacific Ocean.

Soy supplies are seen to get tighter as carryover estimates are now below 300,000 million bushels near 110,000 million. Carryover estimates dropped 20 million bushels since last month's report. Soy export forecasts increased to a record of 1.25 billion bushels due to bigger Chinese imports and reduced Argentine exports. Export inspections declined 50 percent last week but Chinese imports remain steady. Fundamentally, demand is increasing faster than supply. Technical charts show a positive short term trend.

While ethanol profits declined, the rate of use for this corn-based biofuel is increasing as demand for gasoline rises. The USDA says farmer selling remains bullishly light and demand is moderate but steady. China is rumoured to be considering the sale of corn reserves. US production is expected to drop 1.5 million tonnes. Corn carryover is reaching the magic number near 1 billion bushels. If supplies drop below 1 billion bushels, that is historically tight. The result will stimulate higher prices. Export sales of 863,000 tonnes were at the high end of market expectations.

On the other hand, price increases have plunged the use of feed wheat as buyers are switching to corn. The only support for the current wheat price is lower dollar value that stimulates exports. World wheat production is expected to drop 1.5 million tonnes as against global consumption figures of 1 million tonnes. That pushes global ending stock estimates up 750,000 tonnes over 182 million. Wheat demand remains soft. Russia has a record 22 million tonnes for export this year. Wheat fundamental are bearish as supply exceeds demand. Technical indicators are also bearish. Exports did not meet market anticipations.