New-Crop vs. Old-Crop Corn
Jan 22, 2013
"New-Crop vs. Old-Crop" continues to be the fight most in the industry are talking about and trying to handicap. As we left last week Informa threw out their latest acreage estimates for the 2013/2014 new-crop. Below are their new estimates vs. what we actually planted last year:
- Corn acreage estimated at 99.30 million acres vs. the 97.2 million corn acres we planted in 2012. Basically bumping their previous estimate higher by almost +300,000 acres. Actually lowered their yield to 160.5 bushels per acre and are now expecting a total crop of 14.757 billion bushels.
- Soybean acreage now at 78.77 million acres vs. the 77.2 million soy acres we planted in 2012. Basically lowering their previous estimate by -185,000 acres. But still 1.3 million acres above the previous US record set back in 2009.
- Wheat acreage now at 41.82 million acres vs. the 41.3 million wheat acres we planted in 2012. Basically lowering their previous estimate by -378,000 acres, and now back inline with the current USDA estimate.
Corn continues to dance to the same song... Exports struggling against South American competition. Talk inside trade is that Brazilian vessel lineup to load corn has grown even larger: Several sources now talk about lineups reaching 3.5 million metric tons vs. 2.9 million last week and just 271,000 metric tons last year. Traders also more concerned with rumors that the Argentine government will be issuing another 3 million tons of export licenses next month for 2012/13 corn. To say South American exporters are killing traditional US demand is an understatement. To make matters a little worse I am now hearing that producers in Southern Brazil are harvesting full-season corn at slightly better than expected yields (more supplies coming online in South America, just what we need). New-crop Ukraine corn is also starting to trade into Europe. Lets keep in mind US ethanol demand is also in question, with many in the trade speculating on even more plant closures in the weeks ahead as margins continue to struggle. How long can plants continue to operate in the red is the question?
As for now it seems that "Managed Money" and "Index" players have seen enough liquidation and have taken on more of a "buy-the-break" type mentality. This along "weather" uncertainties should continue to provide near-term support in the grain and soy markets. The problem is we will be needing more bullish news each day to keep the rally moving higher, and I am just not sure we can keep a steady dose. Therefore if you are wanting to re-own previous sales or get long, be patient and do NOT chase the market. I continue to remain "neutral" flat price, believing the markets will remain in "limbo" or in some type of trading range, as fear of increasing new-crop supplies are being kept in check by more reports of extreme weather uncertainties.
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