Published on: 16:32PM Aug 13, 2009
Now that the USDA August WASDE and crop production reports are past and answers have been provided with regards to 2009 acres planted, potentially harvested and current yield expectations, Allendale Inc can shed more light on the present starch vs oilseed imbalance.
It’s very interesting to see how the present research data implies the 2009-10 days supply of corn numbers 46 in size which is equal to the days supply in the 2007-08 market year. The corn supply is just more than a week greater than the rice supply of 38 days. The number of days supply of corn after all demand is met continues to trek in a sideways pattern, rice continues in its downward slope since the 2005-06 market year while wheat sky rockets from its historic low of just 48 days in the 2007-08 time period when all three key starches congregated at extreme lows.
The build of the number of days of supply of wheat has corrected from an extreme low of 48 days just two years ago to a present level of 122 days approaching cushions the US has not experienced nearly a decade ago. Allendale suggest wheat days supply of more than four months is the dark gray cloud which hangs over the corn and rice futures and cash markets potential.
Just as plump is the present day’s supply of wheat, the day’s supply of soybeans remains anemic at best. As you are able to view via the graph, present days supply of old crop remains at less than a two week supply and even though USDA suggest the 2009-10 soybean production at a record large 3.199 billion bushels, after demand is stripped out it leaves us with less than a doubling of days of supply of 25 which mirrors 2007-08 and is a week less than the ten year average. It is interesting to note the days supply of world soybeans numbers just one day more than the ten year average of fifty nine, predicated Brazil and Argentina come through with more typical crops correcting from last years dry weather.
The next two months will likely help solidify just how corn, soybeans and rice crop production develops barring any major weather impact. Spread traders be alert to the present tightness in the number of days supply vs more than ample counterparts.
What are your thoughts with reference to the present situation of the day’s supply of corn, rice, wheat and soybeans? Does the USDA have an accurate estimate of forthcoming supply and demand for
2009-10? What will it take to remove the more than adequate supply of wheat in order to take price pressure off of corn? We welcome your questions.........Joe Victor
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