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Feedgrain Outlook

CattleFax analyst offers outlook for feedgrain production and pricing.

by Kasey Miller, associate editor

TAMPA, Fla. (Feb. 8, 2013) — Continued rationing of corn coupled with better weather conditions, and a significant increase in corn production, should pressure corn prices sharply lower by fall 2013, said Chad Spearman, grain market specialist, at the CattleFax Market Outlook session during the 2013 Cattle Industry Convention and National Cattlemen’s Beef Association (NCBA) Trade Show in Tampa, Fla.

 

For the September 2012-January 2013 period, projected corn stocks averaged a record low 5.8%. This is expected to range from 5.0%-7.0% through April 2013.

Corn feed/residual usage is expected to decline only 100-200 million bushels (bu.) compared to last year, despite higher corn prices, he said, and corn export demand is being rationed.

 

Corn for ethanol production is also being rationed, but the usage of ethanol by the blender is not.

 

For February to June 2013, Spearman predicted that resistance could be in the range of $7.65-$7.75 per bu., finding support from $6.85-$7.00.

 

The 2012-2013 carryover is expected to remain historically low, which supports historically high prices. This has the potential for extreme basis risk in the third quarter of 2013. U.S. crop acreage continues to grow, and 2013 corn acreage is expected to rise from 97.2 million acres to 98 million acres in 2013. Additionally, 2013-2014 the projected stocks-to-use ratio is expected to rise to 10%-12%, so prices could potentially be lower.

 

Spearman predicted a transition period from June through September-October and, with it, prices in the $6.80-$5.80 per bu., and fourth quarter risk down to the $4.50-$5.50 range.

 

Global soybean stocks-to-use levels should remain near the 10-year average, though U.S. stocks levels are still historically low. He explained that they expect U.S. soybean acreage to increase from 72 million acres to 79 million acres this year.

 

Hay stocks on Dec. 1, 2012, were at the lowest level since 1957, Spearman said, adding he expects hay prices to remain high this year.

 

Wheat, like soybeans, has stayed near the 10-year average, both domestically and worldwide. Spearman predicted that wheat acreage would increase from 55.7 million acres to 58 million acres.