2013-09-09   facebook twitter rss

Wheat Prices Could Fall by £10 per Tonne

A better-than-expected corn (maize) harvest in the United States will put downward pressure on UK wheat prices, which could fall by £10 per tonne in the short-term, according to ODA UK.

Conversely, the potential shortfall in US soybean yields, combined with the unstable political situation in Egypt and the Euro’s falling value relative to the US Dollar, could see short-term increases in oilseed prices, even though the longer-term outlook remains bearish.

Leo von Kameke of ODA Ltd

Leo von Kameke of ODA Ltd

“Short-term weather conditions will be critical in determining harvests in the United States,” states Leo von Kameke. An analyst with ODA UK, which helps farmers to manage price risks, he was the only UK representative on the recent Pro Farmer Crop Tour, which visited farms across Ohio, Indiana, Illinois, Iowa and Minnesota. Now in its 21st year, the Tour is highly regarded within the agricultural sector because it provides a wealth of late-season data which can be compared accurately against historical information as the method used to sample crops and estimate yields has remained constant throughout.

This year’s Tour found that while some corn and soybean crops in eastern and central America show very good potential, the wet conditions, which delayed planting in many areas during the spring, have led to huge variations in crop maturity, while depleted soil moisture levels and frost risks are currently giving cause for concern. As a result, Pro Farmer has reduced its yield estimates to below current USDA figures, which Mr von Kameke believes are also likely to be revised downward to reflect vast unplanted areas in Iowa and Minnesota in the forthcoming September USDA WASDE report published on 12th September.

“Ideal weather will be needed during the next few weeks and if pod filling is unsuccessful the implications for soybean yields would be serious,” states Mr von Kameke.

Assuming perfect growing conditions during September, Pro Farmer estimates that the average US corn yield will be 154.1 bushels per acre (bpa), compared with the 154.4bpa in the USDA’s latest report, putting total corn production at 13.46 billion bushels (342 million tonnes (MT)) compared with USDA’s 349MT. Pro Farmer’s estimate of average US soybean yield is 41.8bpa, giving a total harvest of 3.158 billion bushels (80MT), compared with USDA figures of 42.6bpa and 88.6MT.

Iowa, the Number 1 corn-producing state in the US, should generate a harvest of 2.2 billion bushels, based on the USDA’s estimated average yield of 163bpa across 13.5 million acres. Pro Farmer matched this yield estimate after taking into consideration the variable maturity and soil moisture levels, despite the tour results showing an average yield (potential) of 171.9bpa, compared with just 137bpa in 2012.

In 2011 and 2012 Iowa was also the largest soybean-producing state, but with notably later plantings this year and crops now more vulnerable to adverse weather, Illinois could take the number 1 position. According to the USDA, production there will reach 439,000bu this year, based on an average yield of 47bpa.


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