The grain market spotlight switched to corn from wheat after the U.S. Department of Agriculture last week cut its forecast of corn yield and put the year-end corn stocks-to-use ratio at the lowest level in 15 years.
The news spurred corn prices to near a two-year high with December Chicago corn trading above $4.80 US per bushel. Early this week, trading house Morgan Stanley said corn could rally to $6 US per bu.
That is still shy of the record posted in 2008 of $7.88, but far higher than predicted back at seeding time.
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While the excitement was in the corn market in recent days, wheat could again move to centre stage if Canada’s harvest problems continue and if Russia can’t seed its winter crop.
The Canadian Wheat Board said on Sept. 13 harvest progress was the slowest in six years.
But while Western Canada suffers with rain and frost, Australia’s wheat crop looks to be the best in five years, according to private analyst Australian Crop Forecasters. Lack of rain has hurt crops in Western Australia, but good weather in eastern growing regions promises to more than make up for the deficit. Harvest in Australia begins in November.
The markets also have an eye on how things are shaping up for the global 2011-12 crop.
There are expectations American farmers this fall will seed more winter wheat. The hard red winter wheat states of Kansas and Nebraska have no moisture concerns, Texas is better than last year at this time but Oklahoma is slightly drier.
There is potential for another disaster for Russian winter seeding.
As of Sept. 8, farmers had seeded 8.65 million acres, less than half the amount they had seeded at the same point last year. The soil is too dry to plant.
Russian officials project winter acreage will be 39.5 to 42 million acres, down from 44.5 million last year. But private forecaster SovEcon says that is highly optimistic given the slow pace so far. Indeed, the optimum seeding window in the Volga valley is already passed and sowing there is far behind the national average, SovEcon said.
They could seed next spring, but spring crop yields are traditionally 15 to 20 percent lower than winter crop yields.
The prospect of Russia having another small crop next year will support wheat prices through the current crop year and encourage increased acreage elsewhere.
