Monday, September 14, 2009

A gloomy week for grains

It was another disappointing week for Australian grain growers with few glimmers of hope to point you toward.

On Friday the USDA increased its estimates for US and global stocks of the major grains courtesy of a prolonged and mild spring that has allowed crops to overcome early set backs. Although the USDA estimates came in below most analysts forecasts the trend of rising yields is definitely apparent and the market is already trading estimates well above the USDA September numbers.

Our friends at Ag Commodity Research out of Canada have also increased their estimates of the Canadian canola crop. They are now estimating a crop of 10.7mmt vs the latest StatCan guess of 9.4mmt. This shows the extent of the improvement in the northern hemisphere season.

On the positive side for canola, the Canadian crush is expected to increase some 1mmt this year and the Ukraine crop may also be some 1mmt lower than last year. A monster US crop would cast a large shadow over the oilseed complex, but with demand rising, current increased end stock projections are very much dependent on Sth America producing a record crop. If the US soybean crop escapes frost, attention will turn to crop prospects in Sth America.

Barley is sagging under the weight of a massive global corn crop, but global livestock industries and meat demand look close to bottoming out which should see demand for feed grains rise into our harvest, in contrast to last year when it was crumbling in the face of the Global Financial Crisis (GFC).

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