Ag Market Worried by Seeding Plans

CHICAGO - Apr 5/06 - SNS -- International agricultural commodity markets maintained their relatively quiet tone through the mid-week session, with little overnight business reported.

Light activity and worries a sharply reduced corn area in the United States would push prices to level which further limit demand had the opposite effect, helping trigger a break in prices yesterday. This was compounded by talk the market was technically overbought, causing some traders to sell long positions.

Even so, analysts at the Chicago Board of Trade argue new crop markets should see "solid underlying support as the market needs higher prices in a last ditch effort to attract increased planted acreage to the corn market.

"If not, the market is likely to be extremely sensitive to weather developments this season, as above normal yields would leave the ending stocks at a comfortable level, but even a slight reduction in yield from trend could leave the market is in a very tight situation.

"Assuming a demand base of 11.495 billion bushels and a trend line yield of 147.7 bushels per acre, the new plantings forecast would trigger an ending stocks estimate of near 1.08 billion bushels as compared with 2.351 billion this year.

"If plantings jump 1 million acres from Friday's estimate, ending stocks would come in near 1.206 billion bushels. While this sounds like a comfortable level, a 10.4% stocks to usage ratio would be the 4th tightest in the last 31 years."

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