Feed Peas Hold Steady

VANCOUVER - Aug 11/06 - SNS -- Feed peas have been holding their own against weakening international protein meal and corn markets.

Values in Europe and North America managed to finish the week unchanged in local currency terms; while soybean meal and corn were down on the week. Meal have been on a downtrend since the end of July; while corn had been trying to work itself upward, only to disappoint markets with a higher than expected USDA crop forecast on Friday.

The USDA said this year's corn crop may total 11.0 billion bushels, down 1% from last year and 7% below 2004. Unfortunately, markets were looking for a number closer to 10.795 billion bushels, with trade guesses ranging between 10.38 and 11.103 billion.

By contrast, the USDA's soybean crop estimate was at the bottom of pre-report trade guesses. It came in at 2.93 billion bushels, down 5% from 2005 and down 6% from 2004. Surveys of traders revealed they were looking for 3.02 billion bushels, with guesses ranging between 2.909 and 3.105 billion.

The numbers for soybean meal were good, with the USDA decreasing its forecast ending stocks for the 2006-07 season even while it said global production will likely be one million metric tons (MT) more than thought last month at a forecast 149.8 million MT, up from 144.69 million in 2005-06 and 138.5 million in 2004-05.

However, corn is a factor in discovering soybean meal prices and doubts about the actual size of the ethanol market have started to take some of the bloom off corn. This is not surprising. Markets always believe they over-estimated the demand potential for new uses. This is the idea behind the saying, "Buy the rumor. Sell the fact."

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