CattleFax Delivers Grain, Feed Report
by Troy Smith for Angus Productions Inc.
SAN ANTONIO, TEXAS (Jan. 29, 2010) — During the 2010 Cattle Industry Annual Convention in San Antonio, market analyst Mike Murphy delivered a “Grain and Feed” report as part of the convention’s annual CattleFax Outlook Seminar. Murphy reported record-large corn supplies, estimated at more than 14 billion bushels for the 2009-2010 marketing year. That’s up 8% from last year’s total and surprising, considering 2009’s late-maturing crop and late harvest.
“But the market has traded pretty efficiently,” Murphy stated. “Stocks and use levels have been pretty close, and that favors less volatility in the market.”
According to Murphy, U.S. wheat supplies are high due to large carryover stocks from the 2008-2009 marketing year, so wheat acreage planted for 2010 harvest is expected to be down by 14%, compared to 2009. Corn acreage is expected to rise to about 88.5 million acres. Soybean acreage is predicted to be near 79 acres.
Ethanol production from corn is expected to continue to grow, Murphy said, but at a slower rate than in recent years. Feed usage and exports should increase, too, boosting total corn usage by 8% over last year. Price-wise, Murphy expects a very “seasonal” year.
“The market should be responsive to projections. I expect a summer rally in the corn market, followed by a decline in the fall, unless harvest brings surprises — such as a smaller-than-expected harvest,” Murphy said. “Corn prices should be similar to ’09, on average, ranging from about $3 (per bushel) on the low end to around $4.50 on the high end.”
Murphy said the Environmental Protection Agency (EPA) recommendation for increasing the ethanol blend from 10% to 15% has been delayed. If and when that happens, it would be supportive to corn prices.
The average price of all U.S. hay declined in 2009, by over 25% compared to 2008. Murphy said hay stocks at the end of 2009 were estimated to be the largest since 2004. He expects hay prices to be at moderate levels and steady, unless dairy expansion pushes prices higher.
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