Grain Market Gleanings

Seasonal Price Rally?
Seasonal price patterns tend to suggest stronger prices for all crops into May, on average. Because of dryness in the Southern Plains, wheat may have the most potential, according to George Flaskerud, NDSU extension crops economist. Acres and stocks suggest that oilseeds may also have potential, while feed grains may have the most risk.

U.S. Wheat Acres Lowest in 30 Years
Spring wheat planting intentions, at 15.09 million acres, are down 3.5% from last year, according to the USDA’s Prospective Plantings Report, released March 28.  Durum acres were posted at 2.84 million acres, down 2.3% from last year. Total wheat plantings (winter, spring, and durum) are estimated at 59.04 million acres, which would be down 1% from 2001 plantings and the smallest figure since 1972.

Final Planted Acres Often Vary Widely from Prospective Plantings
There is a tendency for final corn acres to be less than—and final soybean acres to be more than—the prospective plantings report, says Bill Tierney, extension ag economist, Kansas State University. Acres switch from corn to soybeans usually as a result of delayed corn plantings. Weather in May appears to be critical in determining total corn plantings, he explains, and if the weather in May is poor, some corn acres could switch to soybeans. There does not appear to be a strong statistical relationship between changes in corn and soybean planted acres (versus prospective plantings) and changes in the ratio of corn to soybean prices, he notes.

Generally speaking, final seeded acres are relatively close to prospective plantings, Tierney says. Two-thirds of the time, final corn acres are within 1.8% (above or below) prospective plantings. Similarly, final soybean acres are within 3.3% (above or below) prospective plantings. Final seedings of sorghum and spring wheat, however, do vary considerably from final acres. Two-thirds of the time, sorghum acres are within 6.8% (above or below) prospective plantings. Two-thirds of the time, the combined total of spring and durum acres are within 4.6% (above or below) of prospective plantings.

The USDA will release a revised planting report on June 28.

Market Movers, Canadian Plantings
Major market factors to watch, according to Agriculture Canada, are “growing conditions in the major importing and exporting regions, particularly in the U.S. and China, import demand from China related to its WTO commitments and the Canada/U.S. exchange rate.” 

KSU’s Tierney says that “the critical point in the world wheat situation won’t be reached until mid-to-late May, when all of the North Hemisphere’s spring wheat will be sown and the winter wheat crops in the Former Soviet Union, China, Europe and the U.S. will be much further advanced.”   Tierney says Statistics Canada will release its estimate of Canadian wheat planting intentions at the end of April. The early indication is that area seeded to spring wheat in western Canada is expected to decrease while area seeded to coarse grains, durum, special crops and canola is forecast to increase due to higher expected relative net returns. In Eastern Canada, area seeded to wheat and soybeans is expected to decrease while the area seeded to corn increases.

U.S. Wheat, Corn, and Soybeans Planted Acreage, 1996-2002 (million acres)   1996 1997 1998 1999 2000 2001 2002* Wheat 75.1 70.4 65.8 62.7 62.6 59.6 59.0 Corn 79.2 79.5 80.2 77.4 79.6 75.8 79.0 Soybean 64.2 70.0 72.0 73.7 74.3 74.1 72.9 Total 218.5 219.9 218.0 213.8 216.4 209.5 210.9 * Forecast                         Source: National Agricultural Statistics Service

 

Taiwan Flour Millers to Sign Two Year Purchase Intention
In one of the most important traditions enjoyed by the U.S. wheat industry, representatives from Taiwan Flour Mills Association will arrive in Washington D.C. on May 13 to kick off this year’s “Agricultural Goodwill Mission.”  The TFMA signs a letter of intent indicating likely purchases of U.S. wheat over the next two years.  TFMA signed with U.S. Wheat Associates a letter of intent on May 24, 2000 to purchase 750,000 to 850,000 metric tons (MT) for 2000 and 2001. They purchased 1,026,000 MT of U.S. wheat in 2000, and 1,039,000 MT in 2001, exceeding their goal.

Korean Millers Lower Dockage Specifications to 0.3%
U.S. Wheat Associates director Won Bang Koh reports that the Korean millers association has decided to specify maximum 0.3% dockage (current maximum 0.5%) for wheat purchases beginning May 2002.  The U.S. share of Korean wheat purchases for the first two months of 2002 was 57.2%.