Japan Cutting Corn Imports on Higher Prices

The Japanese continue to keep its corn imports at its lowest levels in 26 years, as high corn prices has resulted in feed producers boosting acquisitions of alternative feeds.

According to Mitsuyoshi Haruno, executive director at the Japan Feed Trade Association, he told Bloomberg that Japan will increase "consumption of wheat, wheat bran and dried distillers’ grains with solubles, or DDGS."

Haruno added that corn imports will be close to the 15.3 million metric tons of 2011.

The Japanese finance ministry said feed wheat imports have surged this year from 62,415 tons last year in the same season to 334,349 tons this year. Of that, the U.S. supplied 198,699 tons, equal to 59 percent of the overall Japanese imports. Australia was the next largest feed wheat exporter to Japan, accounting for 127,807 tons.

Feed wheat imports for Japan this year were set at 764,000 tons, but that could be upwardly revised for the fiscal year.

So far for the year Japan has imported 4.36 million tons of grain for feed, down 3.1 percent from the same period last year. But for corn for all purposes, Japan has imported 6.51 million ton in the first five months of the year ended May 31, or an increase of 0.8 percent over last year.

During the same period the U.S. accounted for 85 percent of Japanese corn imports, which could drop to 80 percent for the year as Japan looks for less expensive options.

Corn, Soybeans Jump, Rains Too Late

Most experts who understand the pollination process of corn and soybeans say rains are too late for corn in poor condition, and for soybeans, it's marginal as to how much they will be helped by projected rain in the Midwest of the United States.

Consequently, the price of corn and soybeans reversed direction as the market consumed and understood that rains won't do anything to change corn, and it's not sure how much it'll help soybeans, which have a better change of improving because they pollinate later than corn does.

Once a crop is pollinated, as in the case of corn, nothing can be done to change the yields. All rain can do with corn once it reaches that stage is fill out the existing kernels more.

Corn and soybeans had dropped in price after forecasts for significant rains in the Midwest were recently made. But once the information was understood as to its effects on the crops, prices resumed their climb.

Corn rose another 1 percent on Wednesday, while soybeans got close to a 3 percent boost.

Wheat is being affected by corn and soybeans, but also by the increasing concerns over global supplies.

The projections of yields of corn per acre by the USDA are considered far too optimistic at this time by outside experts, who see corn at tops averaging 130 bushels an acre. It could fall as low as approximately 120 bushels an acre.

What still has to be taken into account is how much more damage will be done to corn that still has a chance to improve with the rains. Will there be enough rain to salvage the crop, or will it fall sporadically and quickly, not allowing for it to soak into the ground. That's the key to helping corn that still has possibilities for improvement. If it doesn't and the drought continues in those areas, it's unknown how badly the average yield per acre for corn will drop to.

But the U.S. drought isn't the only drought story affecting corn. There is also a drought in parts of Russia, Europe and Australia which could end up bringing down the global output for the year, which could continue to support higher corn prices.

The issue there is how many products using corn will experience reduced production because of the higher corn prices. That could pull they other way on corn prices, making it hard to project how high prices will go.

At this time, and with the current data, it appears about $9 a bushel is a good bet, although rapidly changing circumstances could alter that quickly.

Corn for December delivery were up 9.75 cents to finish at $7.88 a bushel and November soybeans rose 46 cents to $16.155 a bushel.

North, South Dakota Corn Stocks Down

Corn stocks, along with wheat and soybean stocks, have plummeted year-over-year in North and South Dakota.

Corn stocks in North Dakota stand at 48.3 million bushels, down 18 percent over last year. South Dakota corn stocks are at 166.3 million bushels, a decline of 3 percent from 2011.

Soybean stocks in North Dakota are at 13.2 million bushels, a fall of 35 percent over last year, while South Dakota soybean stocks are at 24.5 million bushels, a decline of 17 percent.

Wheat stocks in North Dakota come in at 69.1 million bushels, down 22 percent from 2011, while South Dakota wheat stocks stand at 23.6 million bushels, falling 3 percent from last year's levels.

South Dakota Corn Production Soars 36 percent

Corn production in South Dakota climbed in a big way in 2011, as the value of corn soared for the year.

According to estimates from the U.S. Department of Agriculture, corn jumped in value in South Dakota to $3.95 billion, a huge improvement of 36 percent over corn value in the state for 2010.

Other production results had soybeans ending 2011 valued at $1.72 billion, while hay came in at a value of $1 billion. Wheat came in just shy of $800 million, finishing the year at $799.5 million. Alfalfa hay was just behind wheat in value for South Dakoto, closing 2011 at $793.1 million.

Corn Results | Wheat, Soybeans Pressuring Prices

Corn results today are wheat and soybeans pressuring the prices down, along with a stronger U.S. dollar.

Chicago Board of Trade corn futures succumbed to outside pressure Tuesday, ending lower amid falling wheat and soybean markets, traders said.

March corn ended down 7 1/2 cents to $3.83 1/2 per bushel, May corn ended down 7 cents to $3.94 3/4 and July corn ended down 7 cents to $4.05 1/2.

The market had been higher for much of the day despite lower wheat and soybeans, but corn sank as those markets extended their losses.

"Wheat and beans are slam-dunking corn," said Vic Lespinasse, analyst for grainanalyst.com.

Weak crude oil and a stronger dollar weighed on corn and other commodities, analysts said.

The market climbed in early trading on technical strength and follow-through from Friday's sharp gains, said Shawn McCambridge, senior grains analyst for Prudential Bache. But McCambridge and other analysts said the market does not have a good reason to rally sharply.

"I think we're going to have to have some kind of a fundamental backing in order to continue to extend these gains," McCambridge said.

The demand outlook remains weak, with exports, ethanol and feed demand all suffering.

Traders noted a continued unwinding of the corn-soybean spread due to concerns that corn is losing acres to soybeans. Those concerns flared again with Informa Economics acreage projection released on Friday, a trader said. Some analysts said concerns about corn losing acreage are overblown, however.

Corn climbed above $4 in the March contract overnight and again early Tuesday, but retreated each time.

A trader called $4 "massive resistance," although McCambridge called it "a psychological benchmark we continue to watch."

South American weather remains a key focus of both corn and soybeans, and continued dry weather in Argentina is fueling concerns about crop damage. But support from the continuing dry weather there was mitigated by beneficial rains in Brazil, traders said.

CBOT oats futures ended lower. March oats were down 8 1/2 cents to $2.14 per bushel and May oats were down 8 1/2 cents to $2.23 1/4.

Ethanol futures were unchanged to slightly lower. February ethanol ended flat at $1.612 per gallon and March ethanol ended down $0.013 to $1.617.

-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com
(END) Dow Jones Newswires
01-20-09 1527ET
Copyright (c) 2009 Dow Jones & Company, Inc.

Conclusion:

Results for corn will continue to push downward in conjunction with wheat and soybeans. Oil prices didn't help, also falling, neither did the U.S. dollar getting stronger today help.