Grain Markets - Tuesday, 17 April 2012

Finally, a good rain was received in the western Corn Belt over the weekend!  Unfortunately though the precipitation was the primary negative force driving the grain markets lower on Monday.  That along with weakness in the financial markets associated with a slowdown in the Chinese economy and a potential increase in their corn acreage and concern over Spain’s debt issues have all weighed in on the grains.  Also the government believes that U.S. livestock producers are going to begin feeding more wheat, which would make our current tight stocks supply less of a positive market influence.

We have all observed over the past several weeks the enormous effect that China has on our markets so when there is news that suggests that their economy is slowing we worry about what kind of effect this will have on our economy in the U.S.  They are experiencing the slowest growth in GDP in 3 years and falling below estimates of 8.3% to 8.1% growth for the first quarter.  Compare that to growth in the U.S of only 2 to 3% to put that into perspective!   In 2011 China consumed 60% of the GLOBAL soybean trade, that is significant, and also concerning when you consider that one buyer commands such an extraordinary percentage of the world’s soybean supply!

La Niña will be officially confirmed over on April 22nd.  We then will be moving into a neutral ENSO pattern for the majority of the summer followed by a potential switch to El Niño in August or September, according to Ag Meteorologist and Climatologist at Iowa State University, Elwynn Taylor.

According to the USDA information there has not been any reported planting of soybeans at this point but corn planting continues to set new records as is shown in the graph below.

 

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