Export Feed Peas Weaken

VANCOUVER - Sep 19/08 - SNS -- European feed pea markets continued to decline in local currency terms, while holding up better in U.S. dollar terms, while exporters in North America continue to report little demand for their product outside domestic business.

Data from the Canadian Grain Commission (CGC) indicate direct sales of fed peas to livestock producers and compound feed manufacturers in western Canada jumped ahead of last year. Since the August 1 start of the current marketing year, primary and terminal elevators report selling 21,600 metric tons (MT) of peas directly to domestic users, compared to 7,900 MT last year.

Looking at major feed ingredient markets, Alaron Trading Corporation's Tim Hannagan said corn markets are suffering from a lack of buying interest as end users speculate that prices are more likely to decline than improve over the short term.

"(But) demand looks to be its strongest in October when harvest gets underway in major producing states. Last week I said look for our Friday crop report to come in with small cuts in corn production, yield and ending stocks giving us a higher open. That happed with production cut 216 million bushels to 112.072 billion bushels our yield at 152.3 bushels per acre versus 153.3 and ending stocks dropped 115 million bushels. All these numbers were marginal changes at best, but I do expect lower numbers on to October report.

"I also said unless Hurricane Ike wipes out oil rigs, grains would have another leg down this week possibly as low as 5.15. We dropped from a higher close last Friday, of 5.60 to a 5.20 low or 5 cents from our call. Now what does next week have in store? Until harvest begins October 1st, grains continue to follow outside markets. Unless something enters that is not there now we have a chance for one more leg down before we turn up for an October harvest rally and short covering ahead of our October 10th USDA crop report which should be expected to be friendly. There negative news is weather looks dry and warmer allowing corn to mature faster.

"Large index funds have not shown us their done liquidating their massive long holdings yet. Worse case scenario is December corn seeing 5.05 to 5.15 next week. If seen, buy aggressively. Here is the friendly side that is equally as possible is the U.S. government has taken action to curb the negative influence on stock indexes and funds may decide to temporarily stop their broad based selling."

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