Rabobank’s Agri Commodity Markets Research group has issued a new report on the U.S. grains complex and highlighted key global factors that may influence grain supplies and prices for livestock producers. The reports notes:

  • The USDA made a number of supply side revisions in its November World Agricultural Supply and Demand Estimates (WASDE) report. Soybean production was revised higher by a further 69 million bushels, while corn yield was revised down by 1.3 bushels per acre to a forecast crop of 12.9 billion bushels.
  • Brazilian and Argentinean soybean production figures were revised 1 and 0.5 million tonnes up, respectively, and world corn forecast was revised down by 2 million tonnes.
  • There were also some major changes to world wheat supply, with 2009/10 production revised up by a further 3.8 million tonnes.
  • Despite some clear trends developing in U.S. exports in the 2009/10 season, there were only minor changes made to the demand side of the ledger.
  • U.S. exports are lagging recent years at this stage of the season, with the United States battling for price competitiveness in the world market despite weakness in the U.S. dollar.
  • For U.S. wheat to be more competitive on the world market and increase exports over the remaining weeks of the year, prices will need to fall significantly relative to Black Sea and European Union export prices.
  • Corn exports have also been sluggish this season, despite the exchange-rate benefit of a devaluating U.S .dollar.
  • To reach the USDA’s new export forecast, weekly corn exports will need to exceed the 5-year average by 10% for the remainder of the year. Due to strong competition from an abundance of alternative feed grains, Rabobank researchers believe the ‘catch-up’ needed to achieve the USDA forecast is unlikely to materialize this season.
  • A lack of available exportable surpluses in other countries, particularly Brazil and Argentina, has meant the United States is the only available soybean supplier to the world market at present. As such, U.S. soybean sales have been strong in the early stage of the 2009/10 season.
  • With 2009/10 soybean export sales pace 9% ahead of the 5-year average and shipments 13% ahead of the 5-year average, the USDA has increased its soybean export forecast. However, Rabobank expects a significant shift in sales to new crop South American supplies from January onwards, which could see a bigger-than-expected jump in U.S. 2009/10 soybean ending stocks.

The Agri Commodity Markets Research group is part of Rabobank’s Food & Agribusiness Research department, a global network of 80 analysts focused on issues and developments affecting all sectors of the global food and agriculture value chain.