Depressed grain markets have wheat producers and others waiting on better prices. Well, don’t look for rallies any time soon, is the advice from Richard Brock, president of Brock Associates and Corn & Soybean Digest columnist.
That was his recommendation on March 5 at the 2010 Commodity Classic. Since then, wheat prices are down over 20¢ bu., along with a 15¢ drop in corn and over 25¢ for soybeans. World Supply and Demand reports from USDA helped drag down markets. According to Friday’s Brock Report, U.S. wheat ending stocks were raised due to slower-than-expected domestic food usage.
“It’s not the decision-making time on wheat,” says Brock. “I don’t want to do anything with this market.”
The Brock Report states that “USDA cut its estimate of 2009-2010 U.S. food usage of wheat to 920 million bushels from 940 million based on the latest mill grind data from the U.S. Bureau of Census,” the report says. “Food usage is now expected to be down 7 million bushels from a year earlier. USDA cited high flour extraction rates and declining per capita consumption of wheat and flour as the reasons for lower domestic usage.
“Despite the increase in projected ending stocks, USDA raised its projected range for the U.S. on-farm average price of wheat by 5¢ on both the high and the low ends to $4.80-5/bu.”
At the same time representatives of National Association of Wheat Growers (NAWG) and other farm groups were testifying before the House Agriculture Committee on the need for legislation to provide more trading with Cuba, USDA raised its projection for world wheat ending stocks by 900,000 metric tons to 196.8 million tons.
“In addition to the larger U.S. stocks, notable changes in the world wheat balance sheet included a 2.1-million-ton increase in Russia’s beginning stocks due to revisions to historical feed usage estimate,” the Brock Report says. “Argentina’s crop production was also raised by 600,000 tons to 9.6 million tons.”