US maize market waits for export news
US maize prices remain unchanged this week, with little interest in the market.
The Chicago December futures contract settled on Tuesday, 27 October at 219.0¢/bushel.
All eyes are on the export market, as the USA needs to ship more maize to offset its high production and inventories. On the positive side, Russia finally made a formal request for food aid and American farmers are hoping that their Government will deliver maize to Russia.
However, there are indications that China has re-entered the global market as an exporter and this adds to competitive pressures on US maize. There are reports that China has 2 million tonnes on offer and has already sold 500,000 tonnes to Asian customers.
Meanwhile the domestic harvest continues apace, with 72% of the crop gathered. This compares with 63% at this time in 1997 and a five-year seasonal average of 53%. Good weather forecasts suggest that the crop will be harvested without a glitch and this will add to the oversupply in the American corn belt.
Russia aid leaves US wheat market cold
WHEN Russia finally made its formal request to the USA for food aid this week, the wheat market scarcely reacted.
Rumours of grain exports to Russia have circulated for several weeks and the US market had already risen to reflect the hopes of an export outlet for American wheat.
Many analysts argue that the federal Government is playing up subsidy and food aid stories in order to boost wheat prices for farmers before next weeks national elections. The market is cautiously waiting to see what quantities of wheat will be promised to Russia after the elections, before reacting to the latest news.
There are plenty of politically-motivated initiatives in the wheat market to help prices ahead of the elections. Under the Loan Deficiency Program (LDP) of farming subsidies, the federal Government is about to pay out $2.86 billion to wheat producers to make up their losses.
The extra cash will buy time for the farmers and reduce the urgency of selling their crop to pay off their operating loans. This could reduce short-term supply in the market, thereby supporting prices, but could result in extra product hitting the market next year.
On the Chicago Board of Trade, the December futures contract closed on Tuesday, 27 October at 295.2¢/bushel, compared with 286.2¢/bushel a week ago.
Ample production presses US soyabean prices
HELPED by favourable weather conditions, the autumn bean harvest is running smoothly with 82% of the crop already gathered, in line with the five-year average of 77% at this time of year.
The ample domestic bean production is putting pressure on prices and the market has eased further over the past week. The Chicago November futures contract closed on Tuesday, 27 October at 548¢/bushel, down slightly from 551.0¢/bushel last week.
The availability of new-crop beans has resulted in the crush rate being stepped up. During this week 31.94 million bushels of beans have been crushed, up from 30.7m bushels a week ago.
With much of the American soya bean crop already harvested, traders are starting to switch their attention to the southern hemisphere.
In both Brazil and Argentina there are reports of increased planting of oilseed crops in place of corn due to prevailing weather conditions. The likely increased acreage in South America comes on top of a record crop in the USA this year of 2.8 billion bushels.