Feedgrain Market Outlook
Vol. 18 No. 83 - October 23, 2009 - PDF format
Market Situation
Monday’s Crop Report showed a slight increase in the Crop Condition Index score, up one point to 378. This rating system of the corn crop has been flat virtually all year with the percent of crop rated as good and excellent near 70 percent. In 2004, the last year of record high corn yields, the CCI was 392 with 75 percent of the crop good and excellent.
Crop maturity is still a concern given the wide area of the northern Corn Belt that has experienced a killing freeze and we are still two weeks behind normal in crop development. As of Sunday the 18th, 83 percent of the U.S. corn crop was rated as mature compared to a normal level at this time of year of 97 percent. Illinois, Michigan, and Wisconsin were all 20 percentage points or more behind and North Dakota was 48 percent late, 89 percent mature in a normal year, 41 percent in 2009.
But the feature of the Crop Report that has been given the most attention by market analysts this week is the delay in harvest. The five year average of percent harvested for this week in October is 46 percent. As of Sunday, 17 percent was harvested, three weeks behind. Every state should be at least 20 percent harvested but Michigan, Minnesota, North Dakota, Ohio, South Dakota, and Wisconsin are all still in single digits.
Another feature of the grain markets this week has been the support of outside markets. The Dow is trying to hold the psychologically important level of 10,000 and our barometers of economic recovery and commodity demand, crude oil and copper are up. Crude oil surpassed $80 per barrel and copper broke above $3.00. Prices are off some today, perhaps taking profits from a good week. Prices as of 2:00 pm, CDT:
| Friday October 16 | Friday October 23 | Weekly Net Change | Weekly Percentage Change | |
| Dow Jones Ind. Avg | 9995.91 | 9977.24 | -18.67 | -0.19% |
| Dec ‘09 Crude Oil | 79.02 | 80.24 | 1.22 | 1.54% |
| Dec ‘09 Copper | 2.85 | 3.02 | 0.18 | 6.20% |
| Dec ‘09 Dollar Index | 75.77 | 75.59 | -0.19 | -0.24% |
| Dec ‘09 Corn | 3.7200 | 3.9775 | 0.2575 | 6.92% |
| Dec ‘10 Corn | 4.1250 | 4.2975 | 0.1725 | 4.18% |
| Dec ‘11 Corn | 4.1850 | 4.3225 | 0.1375 | 3.29% |
Market Strategies
The current rally in grain prices appears more driven by investment dollars flowing in than a fundamental shift in supply and demand. As such a change in sentiment could cause a reverse in course very quickly. But I am still looking for higher prices generally in 2010. Corn demand is strong and carryover is tight. While soybean and wheat carryover stocks are at more comfortable levels, rice remains tight. A supply disruption of any kind in these volatile markets could result in a sharp price response.
Mark Welch
Texas AgriLife Extension Economist
401 C Blocker Building
TAMU 2124
College Station, Texas 77843
Tel. (979)845-8011
Fax. (979)845-4906
JMWelch(at)ag.tamu.edu
The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas AgriLife Extension Service. Texas AgriLife Extension Service assumes no liability for the use of this newsletter. Educational programs of the Texas AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating