Despite the anticipation of record 2014 corn and soybean harvests, supplies remain surprisingly tight. The combination of a late harvest, storage and transportation issues will restrict grain flow and drive a post-harvest cash premium through the end of the first quarter 2015, according to a new report from Rabobank, Agweb reports.
The slowest corn harvest since 2009 will exacerbate the challenges with 2014 grain flows. Rabobank estimates that the country started November with available corn stocks down 1 billion bushels — 18 percent — compared to year earlier levels, and that’s with 2013 stocks that were hampered by the 2012 drought.
Corn buyers who had been expecting a large harvest have driven basis values positive across the US to satisfy short-term needs. While harvest is expected to be mostly complete by the end of November, the movement of grain will make filling storage to capacity a challenge, according to Rabobank.
“Reluctant farmer selling is the most critical factor in determining grain flow for the 2014/15 crop,” the report says.
Many elevators report slow progress in filling commercial storage due to farmer preference to store on-farm. The main driver of this has been a reluctance to sell below break-even prices, which Rabobank estimates to be in the US$4.20 to US$4.50 per bushel level for the median Midwest farmer. Rabobank expects 64 percent to 68 percent of stocks to be on farm as of December 1, 2014, with flat to 12 percent lower off-farm storage.
“With significant stocks not yet priced, there is a high probability that cash prices will drop significantly when grain flow increases,” Rabobank says.
However, a cash premium reflecting the risk of selling unpriced grain is likely to develop for the portion of the crop that is put into storage through the first quarter of 2015.
Read more HERE.
The slowest corn harvest since 2009 will exacerbate the challenges with 2014 grain flows. Rabobank estimates that the country started November with available corn stocks down 1 billion bushels — 18 percent — compared to year earlier levels, and that’s with 2013 stocks that were hampered by the 2012 drought.
Corn buyers who had been expecting a large harvest have driven basis values positive across the US to satisfy short-term needs. While harvest is expected to be mostly complete by the end of November, the movement of grain will make filling storage to capacity a challenge, according to Rabobank.
“Reluctant farmer selling is the most critical factor in determining grain flow for the 2014/15 crop,” the report says.
Many elevators report slow progress in filling commercial storage due to farmer preference to store on-farm. The main driver of this has been a reluctance to sell below break-even prices, which Rabobank estimates to be in the US$4.20 to US$4.50 per bushel level for the median Midwest farmer. Rabobank expects 64 percent to 68 percent of stocks to be on farm as of December 1, 2014, with flat to 12 percent lower off-farm storage.
“With significant stocks not yet priced, there is a high probability that cash prices will drop significantly when grain flow increases,” Rabobank says.
However, a cash premium reflecting the risk of selling unpriced grain is likely to develop for the portion of the crop that is put into storage through the first quarter of 2015.
Read more HERE.
The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine GFMT
which is published by Perendale Publishers Limited.
which is published by Perendale Publishers Limited.
For additional daily news from milling around the world: global-milling.com
No comments:
Post a Comment