November 19, 2009

 

Global corn stocks to tighten, soy to increase

 

 

Global corn stocks could tighten next year despite a projected larger crop as demand outstrips supply, while soy stocks will increase from record harvests in two consecutive seasons, according to US analyst AgResource on Wednesday (Nov 18).

 

Much of the increased corn demand will come from the expanding biofuel industry.

 

Estimating that soy would reverse a recent trend of tight supplies, AgResource president Dan Basse said corn will take over the bullish leadership from soy.

 

Basse projected that corn stocks would fall to between 115-117 million tonnes next season, compared to the 130 million tonnes projected for 2009-10.

 

Soy stocks would increase by 15-17 million tonnes to 58 million tonnes in 2009-10, Basse said.

 

Global wheat stocks were also expected to rise by 10 million tonnes to about 190 million tonnes next season.

 

The outlook for tighter corn stocks is expected to keep prices firm in the coming months whereas soy and wheat prices could be dampened by rising stocks.

 

CBOT corn prices could rise to US$4.60 to US$4.80 per bushel by March, while CBOT soy may fall below US$8 from around US$10 currently, Basse estimated.

 

However all grain markets would be subject to price volatility in the months ahead because of tension between generally heavy fundamentals and increasing investments by funds, Basse added.

 

There will be a battle between larger grain supplies and a continued flow of money into the commodity market, he said.

 

Global corn output was seen rising by 14-15 million tonnes to just over 802-804 million in 2010-11 but demand would grow faster, with drivers including US ethanol development.

 

Soy output would rise slightly to 247 million tonnes in 2010-11 to exceed the record world crop of 245 million expected this season, Basse said.