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KARL SETZER

By Staff | Mar 2, 2012

Traders continue to debate the current export scenario on corn and soybeans. At the present time U.S. corn exports are running equal to last year’s pace, but the USDA is expecting a 10 percent decline in corn shipments.

Analysts are quick to point out this elevated demand is from China filling storage, and is not a pace that will last. Soybean loadings is down 26 percent on the year though, with only a 15 percent decline being projected.

U.S. beef exports continue to increase, even with lower cattle numbers. In 2011 U.S. beef exports increased by 22 percent and crossed the $5 billion mark for the first time in history.

Some livestock analysts believe this volume will increase by another 10 percent in 2012, while others claim the growth rate will slow to between 4 and 6 percent.

This expected increase to beef exports is positive news for the U.S. feed grain market as it indicates more grain consumption. The real question is if the U.S. can place enough cattle to satisfy this projected increase.

The leading buyer of U.S. meat on a whole is China. In 2011, China imported $13.4 billion of meat products from the U.S., an increase of 38.8 percent from 2010.

This was enough of an increase to push total Chinese ag imports last year to $94.87 billion and become the U.S.’ leading destination for sales.

China did decrease its soybean imports though, which has had a negative impact on that commodity.

The production of genetically modified grain continues to increase around the world. For this marketing year the world grew GMO crops on 387.2 million acres, an increase of 8.1 percent from a year ago.

Of the world’s crops, 82 percent of the soybeans are GMO, as is 33 percent of the corn.

This increase in world GMO production makes it difficult for buyers with strict non-GMO regulations such as the European Union to satisfy usage.

New crop acreage estimates are becoming more of a topic in today’s commodity market, especially on corn. Most analysts are expecting to see an increase of corn acres in 2012, between 2 and 3 million more from a year ago.

As a result, it is believed the soybean complex will need to push new crop bids to maintain adequate plantings of that crop.

This may not be the case however, as larger-than-expected soybean crops out of South America have reduced the need for a large soybean crop in the United States.

What will be as much of a factor in final crop size as acres is weather during the growing season.

Some traders are already expecting final yields to be below trend given the tendency for warm winters to be followed by warm summers.

This is especially the case for corn, which tends to have its yield drop below trend in summers with warm weather conditions.

Others are quick to point out that how far yield dips below trend is the real issue, and three consecutive years of belo- trend corn yields is very unlikely.

Brazilian officials have announced plans to build a new export terminal in the Amazon region. This terminal will have the capacity to move 18 million metric tons of grain exports a year, making it one of the largest in the country.

Construction is expected to begin later this year and be operational by 2014. This will give Brazil another edge on the United States in the world soybean market.

The final export data for the ethanol industry in 2011 has been released, and showed record shipments for the month of December.

For the month, the United States loaded out 173 million gallons of ethanol. The main destinations for ethanol were Brazil and Canada, both of which took record volumes.

umulative ethanol exports for the year were also a record at 1.2 billion gallons.

Karl Setzer is a commodity trading advisor and market analyst at MaxYield Cooperative. He can contacted at ksetzer@maxyieldcooperative.com.

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