Demand and Global Outlook( November 7th, 2011)

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Demand and Global Outlook( November 7th, 2011)

This week there seems like to be quite less information about demands for grain worldwide. However, the UN’s Food and Agriculture Organization has warned that agricultural commodities prices are expected to remain at high levels well into 2012. The organization said prices would continue to be extremely volatile, fluctuating on moves in the equity and energy markets.1

Recently, the nation's largest pork processor Smithfield Foods Inc. (SFD) said their hog production would increase considerably because of very strong export demand2. As a main hog’ feed, plenty of corn will be needed to meet their demands for higher hog production, which would potentially drive the corn price up. Also, China will become the world's top importer of agricultural products such as corn used mainly in animal feed within recent years due to limited arable land and "relatively weak" agricultural technologies, and it will affect the corn price positively.

According to Wednesday's supply-and-demand report from the U.S. Department of Agriculture, the U.S. export demand for soybeans are weak, so it implies that the price of soybeans will be bearish before USDA will issue the new report this Wednesday3.

In Kazakhstan and Russia high wheat harvests has led to a shortage of storage space and increase in export transportation costs such that they exceed wheat prices. This should push down the price of Black Sea wheat and have a bearish effect on US wheat prices.4

Overall, large crop prospects in South America could weigh on demand for U.S. supplies, which means the grain futures except corn futures will be bearish during the following few weeks.5 Also, the market was pressured by strength in the dollar, uncertainty about the global economy and European debt will both make the futures market negatively.6

1. http://www.asian-agribiz.com/display.aspx?PageID=0&MemberID=0&screenheight=800&screenwidth=1280# 2. http://www.agriculture.com/news/livestock/cheaper-cn-boosts-smithfield-profits_3-ar20453 3. http://www.agriculture.com/news/crops/cn-bes-close-lower_2-ar20467 4. http://www.universalnewswires.com/centralasia/kazakhstan/viewstory.aspx?id=10532 5. http://www.moneycontrol.com/news/commodities/soybeans-dropeu-debt-woes-south-america-crop-prospects_612647.html 6. http://www.dairyherd.com/dairy-news/Corn-and-soybean-close-lower-on-Monday-133380543.html

Deron7705:18, 8 November 2011