US maize — Russia aid hype cools after Glickman statement
LAST weeks hype and excitement about possible US maize aid shipments
to Russia have given way to caution. Consequently, US corn prices have dropped again in recent days.
Faced with massive oversupply, US corn traders had responded eagerly to comments earlier this month by US Department of Agriculture Secretary Dan Glickman that Russia can count on as much grain as it needs.
Since then, Glickman has backtracked, stating that there would be no action until Russia actually makes a formal request to the USA for food aid and that any deal would include both meat and grains. Analysts point out that Russia could source corn competitively from other countries equally keen to off-load their corn surpluses.
Meanwhile at home, dry weather is helping American farmers bring in their maize crop and this is putting further pressure on prices. In the corn-belt, US producers have already harvested 57% of their crop, compared with 45% at this point in 1997 and a five-year average of 38%.
The USDA expects this season to produce 247 million tonnes of maize, up from 238m tonnes last year. With silos overflowing, farmers will be hard put to store all this maize, but reluctant to sell at todays prices.
While the US government has been busy offering a range of subsidies and programmes to loss-making farmers in recent weeks, seasoned market analysts warn that talk of market-supporting measures could dry up after the November elections.
On the Chicago Board of Trade, the December futures contract closed on Tuesday, 21 October at 219.0¢/bushel, down from 228¢/bushel a week ago.
Caution in US wheat after food aid and pre-election talk
US market talk continues to centre around possible food aid shipments to Russia.
The food aid story, coupled with promises of additional subsidies and programmes for US farmers ahead of the November elections, helped drive prices higher in mid-October.
However, caution has now set in. There are concerns that other regions such as Canada, Europe and Australia will be making their own offers to Russia to alleviate their own domestic oversupply of grain.
USDA Secretary Dan Glickman has pointed out that the Government is still awaiting a formal request from Russia, and that any aid package would include meat as well as grains.
The US wheat market has retreated again in recent days, with the Chicago December futures contract closing on Tuesday, 20 October at 286.25¢/bushel, down from 296¢ a week ago.
Meanwhile, weather conditions for winter wheat planting have suddenly improved and this is putting additional pressure on wheat prices. Farmers are catching up, with 75% of their crop in the ground, compared with a five-year average at this point in the season of 81%.
US soya retreats after earlier excitement
AFTER hitting a two-month peak in early October, bean prices have retreated steadily over the past couple of weeks.
The Chicago November soya bean futures contract settled on Tuesday, 20 October at 551.0¢/bushel, down from 563.5¢ a week ago. The main concern is oversupply.
The American soya bean harvest continues apace. Farmers have already harvested 71% of their crop, compared with a five-year average of 64%. Dry weather forecasts suggest that they will be mostly finished by the end of the month and this prospect of added supply is discouraging any price rally.
There is much debate about the size of this years crop. Last month the USDA actually lowered its forecast of US soya bean production to 2.769 billion bushels from a previous 2.909bn, whereas
several private analysts have raised their production estimates to over the 2.909bn figure. Either way, this will be the biggest crop in record.
Recent bullish stories about Government intervention have given way to some market scepticism, and this has also helped to drive soya bean prices lower in the past few days. In common with other grains producers, soya bean farmers were excited earlier this month by promises of food aid shipments to Russia which could help shift some of Americas excess grain stocks.
However, there has been no formal request from Russia for US food aid yet.
Meanwhile, the volley of USDA announcements about additional subsidies and programmes to help farmers may prove short-lived. This supportive talk for farmers could well dry up after the November elections, some analysts warn.