STAT Communications Ag Market News

Feed Peas Struggle for Value

VANCOUVER - Feb 20/09 - SNS -- European feed pea markets ended the week on a generally easier note, with the underlying tone in markets influenced by weakness in corn and soybeans.

Average grower bids in France slipped from week earlier levels, while markers in Belgium and Netherlands posted modest week over week declines.

Alaron Trading Corporation's Tim Hannagan argues that wile markets are in a weak period, long term demand remains bullish because of China's apparent withdrawal from corn export markets.

"Our weekly USDA export sales report . . . put corn sales last week at 1.332 million metric tons (MT). Over 1 million MT for the fifth consecutive week. Sales to Asian customers were 975,000 MT vs. the four prior weeks of 658,000 MT 752,000; 406,000; and 750,000.

"This report confirms our suspicions that China has stopped exports leaving surrounding Asian neighbors to turn to the U.S. for all their needs. This is extremely bullish long term as it will take our monthly crops report by the USDA raise exports and lower ending stocks.

"Corn followed beans lower into week's end as heavy rains were called for all week end in South America as the key bean pod setting stage winds down. Next week should lie out like this: If weekend rains in South America are as big as expected and we come in Monday and see the next system projected to come in February 25th mid week, we should trade lower Monday," Hannagan says.

"The demand over all out of Asia, especially China, comes on the increase in ethanol to meet government mandates and an aggressive animal feed lot expansion of chicken and hogs in need of more corn. Do not be misled by a pull back in livestock here in the U.S. were in global markets and foreign port expansion of feedlots and corn usage offsets U.S. reductions. 2009 will see more feed to animal ration in the world vs. 2008.

"Now that corn's less than half its price from last summer even U.S. feeders should begin to expand into the second and third quarter. We are not going to run out of corn, but clearly our ending stocks inventory looks lower due to South American crop problems and increased demand. This should make for an interesting battle for spring acres."

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