The burgeoning markets of East Asia and specifically China have become an integral partner in debt acquisition. China is America's largest foreign creditor with an estimated $1 trillion in U.S. government debt. Perhaps equal with its demand for American liabilities is China's appetite for domestic grain supplies.
The Asian economic behemoth purchased half of all U.S. soybean exports in 2008. But China and other growing foreign nations are not immune to a global recession.
The current status of global grain demand was just a portion of USDA's latest Supply and Demand estimates.
Thanks largely to expanded acreage and better than expected yields in Australia, global wheat production is projected to be a record 684.4 million tons. USDA left its projected season-average farm price unchanged at $6.70 to $6.90 per bushel.
The outlook for corn prices appears to be more favorable. USDA lowered its domestic corn ending stocks for 2008/09 by 50 million bushels this month, claiming higher ethanol use more than offsets a reduction in exports. Corn use for ethanol is projected 100 million bushels higher on indications of improving blender incentives.
The 2008/09 season-average producer price for corn is projected at $3.90 to $4.30 per bushel.
The best prospect for price improvement appears to be in the soybean market. While global demand has slowed because of the economic slowdown, USDA pegs domestic soybean ending stocks for 2008/09 at 185 million bushels, down 25 million from last month's estimate.
The U.S. season-average soybean price range is projected at $8.85 to $9.85 per bushel, up 10 cents on both ends of the range.
With tighter supplies being noted in most of the aforementioned crops, the spotlight now shifts to USDA's much-anticipated prospective plantings report due March 31st.