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Macquarie Agri-view
Is the increase in EX-US corn
production all it seems?
Feature article
In our agricultural price outlook we projected the highest price point of the
11/12 season would be in the Jan- Mar period. One of the factors driving this
view is our expectations about seaborne supply in the 11/12 season. We see
the increased reliance on EX-US corn production will cause a supply issue
during the Jan – Mar period. Firstly, winter weather will limit the participation
of Ukrainian corn exports and secondly the world will still be waiting for the
South American harvest. In our view the implication is that during this period
the world will either have to limit import demand or the US will have to be
incentivised to break their normal seasonal export pattern. Both of these
scenarios imply a higher price during this period.
Seaborne supply falls in the 11/12 season, as strong internal demand
wipes out any benefit from increased production
Our View
Corn: The purchase this week of corn by the Chinese clearly overshadowed
the relatively neutral WASDE report. From a global perspective we feel that
the USDA is being too optimistic on both Ukrainian corn production and,
especially, Ukrainian exports. The USDA’s numbers imply a 118% jump in
Ukrainian exports from their previous record high levels, but given the poor
start to their export campaign, this seems unlikely.
Wheat: Wheat has seen a significant fall on the back of the WASDE; we don’t
agree though with the USDA’s changes to either the US or global feed
demand. The discount of wheat feed versus corn globally will likely inspire far
larger levels of wheat feeding than the USDA currently expects.
Soybeans: Even though the US soybean balance sheet continues to look
fragile, the global vegoil picture is somewhat different. The large increase in
CPO supplies and the increased optimism for the world sunseed crops should
further help neutralise any bullish soy fundamentals. We maintain the view
that the baseline support for soybeans will come from the corn market.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Macquarie Agri-view
Is the increase in EX-US corn
production all it seems?
Feature article
In our agricultural price outlook we projected the highest price point of the
11/12 season would be in the Jan- Mar period. One of the factors driving this
view is our expectations about seaborne supply in the 11/12 season. We see
the increased reliance on EX-US corn production will cause a supply issue
during the Jan – Mar period. Firstly, winter weather will limit the participation
of Ukrainian corn exports and secondly the world will still be waiting for the
South American harvest. In our view the implication is that during this period
the world will either have to limit import demand or the US will have to be
incentivised to break their normal seasonal export pattern. Both of these
scenarios imply a higher price during this period.
Seaborne supply falls in the 11/12 season, as strong internal demand
wipes out any benefit from increased production
Our View
Corn: The purchase this week of corn by the Chinese clearly overshadowed
the relatively neutral WASDE report. From a global perspective we feel that
the USDA is being too optimistic on both Ukrainian corn production and,
especially, Ukrainian exports. The USDA’s numbers imply a 118% jump in
Ukrainian exports from their previous record high levels, but given the poor
start to their export campaign, this seems unlikely.
Wheat: Wheat has seen a significant fall on the back of the WASDE; we don’t
agree though with the USDA’s changes to either the US or global feed
demand. The discount of wheat feed versus corn globally will likely inspire far
larger levels of wheat feeding than the USDA currently expects.
Soybeans: Even though the US soybean balance sheet continues to look
fragile, the global vegoil picture is somewhat different. The large increase in
CPO supplies and the increased optimism for the world sunseed crops should
further help neutralise any bullish soy fundamentals. We maintain the view
that the baseline support for soybeans will come from the corn market.
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