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Ontario Grain Farmer Magazine is the flagship publication of Grain Farmers of Ontario and a source of information for our province’s grain farmers. 

US market outlook


Please note that due to the publication schedule, this medium-term outlook of the commodity markets was written based on market intelligence from mid-November, 2010. Efforts have been made to make this as up-to-date and informative as possible, but due to the constantly changing nature of the markets, certain information may be out of date.


as it stands today, it looks very difficult to get adequate corn and soybean acres planted next spring in the US to allow everyone to use all the bushels we’re lead to believe they want. Of course depending on Mother Nature and the yields we receive, it appears we need a combined four to six million acre increase in corn and soybean plantings to meet the growing demand for both.

Now with winter wheat acres up two to three million acres, cotton prices at 25 year highs and a net zero change in expiring and re-enrolling CRP acres; it’s a struggle to find the acres.  

corn outlook
Our corn demand is being driven by a projected 1.1 billion bushel increase in corn used to make ethanol over just the last two years. Something that will be watched very closely regarding this specific demand is the blender’s credit that is set to expire at the end of 2010. The lame duck session of congress will have had to bring it up for a vote and passed it for those to be in place next year. The voter sentiment coming out of our November election was we want whoever is in Washington to stop spending.  Will this be a place they cut back? If it’s not renewed, and that’s a big if, it will not bring an end to the ethanol industry but could slow down its expansion and could reduce demand on the low side by 200 million bushels and the high side by 800 million. By mid January we may have a better handle on the future of these subsidies.

soybean outlook
Our soybean demand is being driven by China’s appetite for imported soybeans.  The US has recorded back to back record soybean crops.  This year’s production is pegged to be 400 million bushels more than we produced just two years ago.  But over the same time frame,  China’s imports have grown almost 600 million bushels. This trend looks almost inconceivable, but with a crushing capacity in China that’s believed to be near 95 million metric tonnes (mmt), as long as their crushing margins hold up it’s possible to see them become an even bigger importer in the future.  Any small indication this trend may be starting to wane and the market will pay a big
price.  Witness the notice in November  that China will raise interest rates sent the soybean market down 70 cents per bushel.

wheat outlook
The wheat market has given the producer great pricing opportunities over the last five months.  A combination of things has lead to these higher prices.  But mainly it was a devastating drought in Russia and surrounding countries that has been the main driver. The US wheat carryout is still a very comfortable 800 plus million bushels. We have had only four years in the last 20 when it was higher.  The world carry out, although down this year at just over 170 mmt, it is still larger than seven of the last 10 years.  The wheat market is probably a follower of corn now more than a leader at this point in time.  But it will probably not totally be able to relax until more is known about next year’s crops. 

Will we pull carry out down further or will we start to rebuild our stocks? •


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