Tuesday, April 16, 2024

Market Outlook – February 2013

By Mark Welch

Editor’s Note: Mark Welch is a Texas AgriLife Extension Economist. Opinions and recommendations expressed are solely those of the author and are intended for educational purposes only. Texas AgriLife Extension Service assumes no liability.


USDA reported another week of sluggish corn export sales in the Jan. 25 release of activity for the week of Jan. 17. After an above average and above pace week last week (as prices hit the low of the marketing year), sales fell off again as prices bounced back above $7.00.

As of this writing, sales for the most recent week were 5.5 million bushels. The average so far this marketing year is 6.9 million bushels, and a weekly pace of 13.3 million bushels is needed to reach USDA’s marketing year target of 950 million bushels.

Back in May, before the drought and with nearby futures trading around $6.00, USDA’s export projection for the 2012/2013 marketing year was 1,900 million bushels. If the current target of 950 million bushels is achieved, it will be the lowest export total since 1971.

Feed Use Numbers

In the January update of world agricultural supply and demand numbers, USDA increased feed and residual use in the 2012/2013 marketing year 300 million bushels for corn, 35 million bushels for wheat, 50 million bushels for grain sorghum, five million bushels for barley and five million bushels for oats. Moving forward, it is important to monitor reports related to grain-consuming livestock numbers in order to develop expectations for this important component of grain use. On Dec. 28, USDA released updated numbers for the U.S. hog inventory. All hogs and pigs as of Dec. 1, 2012, were 66.3 million head, down two percent from September and on par with inventories in 2011 and the five-year average. Inventories prior to the December numbers were above both last year and the average.

Outside Markets

The International Monetary Fund (IMF) released revised expectations for global GDP growth in 2013. Citing the difficulty major developed nations continue to face with increasing debt and slow growth, the IMF lowered its estimate of GDP growth in 2013 from 3.6 percent in October to 3.5 percent.

Advanced economies, such as the United States, EU, Japan, UK and Canada, are forecast to expand their economies by 1.4 percent, though Europe is expected to remain in recession in 2013 (-0.2 percent growth). Emerging market or developing countries are expected to see growth rates of 5.5 percent led by China (+8.2 percent) and India (+5.9 percent).

The Broiler Hatchery report released Jan. 23 shows 162 million chicks were placed for meat production during the week ending Jan. 19. This is up about one percent compared to this week last year and three percent below the five-year average. The Cattle on Feed report shows 11.193 million head in lots with a minimum capacity of 1,000 head on Jan. 1. That is down 668,000 head (-5.6%) from Jan. 1, 2012, and is three percent below the five-year average.

2013 Corn Marketing Plan

Weather forecasts out of South America are increasingly driving corn and soybean futures. At this point, production prospects remain favorable on combined record corn and soybean acres in Brazil and Argentina. I have priced 20 percent of the 2013 crop. With expanded acreage and favorable growing conditions in South America, the likelihood of strong plantings in the United States next spring, and weak export demand at current price levels, I see more downside price risk than upside potential at this time.


Contact Mark Welch at (979) 845-8011 or JMWelch@tamu.edu.

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