Since Oct. 13, December 2011 wheat futures at Chicago have traded in a range of about 45 cents, with a high of $6.53. That contract is now about $1.80 below the late August high. Prices have been pressured by large production in the rest of the world, forecasts of much smaller exports, and prospects of abundant year-end stocks, he said.
“The USDA projects 2011-12 marketing-year exports at 975 million bushels, 314 million less than exported last year. Exports during the first quarter of the year (June through August) were 30 million bushels larger than those of a year earlier,” he said.
The USDA projection then implies that exports during the last three quarters will be 344 million bushels (33.6 percent) less than those of a year ago. As of Oct. 27, cumulative export inspections were only 10.5 million bushels less than the total of a year ago. Outstanding sales as of Oct. 20 stood at only 166 million bushels, 109 million less than sales of a year earlier.
“Exports are clearly slowing in the face of large foreign crops,” he said.
Crop prices received some brief support from the aversion of a financial meltdown in Europe, but concerns about global economic conditions continue. The USDA’s Crop Production report on Nov. 9 will provide updated forecasts of the size of the U.S. corn and soybean crops. Unless those forecasts are lower than expected, crop prices may drift back to the lows established in early October, he said.