In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
Friday’s USDA quarterly grain stocks report came in mostly as expected. Planted corn remains at a record-high of 96.4 million acres, which is 5 percent above last season. Corns stocks on June 1 were at 3.15 billion bushels, down 14 percent from a year ago and the lowest since 1998. Soybean stocks and acreage are a little more than expected, and wheat estimates are close to projections. Now, the focus will be on just how much the drought will reduce yield.
The USDA’s 166 bushel-per-acre (bpa) corn yield estimate is undoubtedly too high. With private forecasts for drought-reduced corn yield below 160 bpa, corn futures prices in the month of June jumped from $5.51 to $6.72 and are poised to move higher based on a hot, dry July forecast for the corn belt. Forward futures contracts for September and December 2012, which had been trading in the $5.05 to $5.10 range in early June, are now in the $6.50 to $6.70 ranges.
Contact John T. Barone at firstname.lastname@example.org.