By Ibrahim Patel
: The grain stock and acreage report of the USDA suggests rally for corn and soybean while predicts bearish for wheat. It indicated strong demand from livestock and biofuel refiners was whittling away granary surpluses, while weeks of rain was shrinking the potential size of crops just planted. According to the quarterly USDA stock report released on Tuesday, corn stock in the US warehouses on 1st June was highest since 1988 at 4.4 billion bushels (each of 25.216 kilo), but 100 million bushels less than the market expectation.
Similarly, soybean reserve stock was 625 million bushels (each of 27.218 kilo), which was 45 million bushels less than market expectation, while wheat stock was put higher than traders estimates at 753 million bushels (each of 27.218 kilo). The USDA’s acreage report was based on surveys of more than 70,000 farmers during the first two weeks of June. The survey missed the rainiest weeks of late June. The department said it would re-survey soybean farmers due to the weather related delays in planting. Analysts believe that as it isn’t clear yet that how much acreage of soybean is more affected due to weather event, its effect isn’t reflected in the prices yet.
Corn sowing was done in 88.6 million acres which was more than the estimates of analysts and that of soybean a little less than market prediction but 2% more than that of 2014 in 85.1 million acre, while that of wheat, more than trade estimates in 55.367 million acre. Such figures of the USA, definitely affects prices, which is renowned as the biggest global producer of corn and soybean.
On Wednesday profit-booking was witnessed in CBOT grain futures market which was heavily over bought Tuesday. Corn benchmark September futures declined by 0.38 cents to be quoted at $4.21, wheat by 29.25 cents to be quoted at $5.89 and soybean August crashed by 5.38 cents to be quoted at $10.42. Following the USDA report on Tuesday, corn July spot futures jumped by 4% to be at $3.99, soybean rose by 3.3% to be at $10.36 and wheat by 2% to be at $5.92. The global grain market was slipped into bearish following reports about record grain stock of a decade in the warehouses across the world due to record harvesting of grains in south & North America, black sea countries and China. Consequently, price fluctuation also contracted in the grain markets of the world.
With heavy rains since last one month in the US Midwest, there were concerns across the world that corn and wheat yield would be less with delay in soybean sowing. Dry weather in two big wheat producer countries France & Canada has increased worry about less supply. Nervousness in the market increased also due to weather bureau forecast about El-Nino event which led towards predictions of weak grain crops in South America, Australia and South-east Asian countries. On Wednesday, the Canadian statistics agency said that wheat sowing would be done in 24.1 million acres, which is 1.3% more as compared to the last year.
[Courtesy - www.commoditydna.com]
Ibrahim Patel is well-experienced commodity & currency expert. He has writing experience in the field since 35 years. He is working in Sandesh Gujarati newspaper and also editor of www.commoditydna.com. He had vast experience in analysis of trends in comodity markets in Vyapar, a commercial newspaper from Mumbai.[/vc_column_text][/vc_column][/vc_row]