Will US maize dominate the 2012 cereals market?

WHETHER cereals values will rise, to the benefit of growers, or fall, to the benefit of livestock feeders, is going to be largely down to the as yet unplanted US maize crop.

Other, normal market fundamentals will continue to impact the futures market - which this week is continuing to run either side of the mid £160 per tonne mark for May wheat (London) - but with the USDA latest deliberations pointing to possibly the largest planted maize (corn) area since 1944, there could be some interesting developments later this year.

HGCA analyst Jack Watts said there were two big ‘ifs’ to be surmounted before any talk of a bumper maize crop exerting a bearish influence on the grains market - if growers did indeed react to current high maize prices and plant more, and if the States’ main growing areas did see a normal growing season, which they last had in 2009.

Market reaction

Futures markets were not yet reacting one way or the other to the bumper maize crop prospect - it was too early said Mr Watts. But they were nevertheless under the influence of what was a currently tight supply/demand situation for maize.

“You might wonder why wheat values are where they are when there is apparently so much wheat around the globe,” said Mr Watts. “But it is all down to maize and a strong demand for feed grains around the world.”

The UK wheat market was actually in a fairly tight supply/demand situation because of rapid export progress of old crop which was attractive to buyers, without discount, because of its quality. This was tending to support the market, he said. But otherwise it was a market tending to move ‘sideways’ rather than any definitive up or down direction with little news to change things.

It was the strong global feed grains market which would be watching firstly, US plantings, and then, growing conditions.

The USDA has suggested the combination of the two could see a massive 362 million-tonne US maize crop - almost 40m tonnes up on the 2011 harvest.

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