USDA lowered the 2010/11 wheat carry out by 49 million and decreased 2010/11 Yield by.2 bushels/acre.

Transcription

1 Friday October 8 th 2010 World Ag Supply & Demand Estimates Very Bullish for Corn Bullish for Soybeans Friendly U.S. Wheat USDA lowered the 2010/11 corn carry out by 214 million and decreased 2010/11 Yield by 6.7 bushels/acre. The corn yield is 4.3 bushel below the average trade estimate. USDA lowered the 2010/11 soybean carry out by 85 million and decreased 2010/11 Yield by.3 bushels/acre. The soybean yield is.47 bushel below the average trade estimate. USDA lowered the 2010/11 wheat carry out by 49 million and decreased 2010/11 Yield by.2 bushels/acre.

2 U.S. corn production for 2010/11 is forecast 496 million bushels lower as a 258,000-acre increase in harvested area is more than offset by a 6.7-bushel-per-acre reduction in yield to bushels per acre and endings stock of 902 million. As forecast, this year s yield and production still would be the third highest on record. Higher 2010/11 corn beginning stocks raise prospects for 2010/11 feed and residual disappearance, especially during the September-December quarter. Ending stocks for 2009/10 are raised 322 million bushels based on the September 1 stocks estimate. U.S. feed grain projected supplies: A number of changes are made this month to 2009/10 corn usage with the biggest a 358- million bushel reduction in feed and residual use as indicated by the September 1 stocks and small upward revisions to exports and food, seed, and industrial (FSI) use based on the latest available data. Sorghum FSI use and exports for 2009/10 are also lowered slightly this month. Changes to 2009/10 feed and residual use for barley and oats reflect small revisions to June 1 stocks from the September 30 Grain Stocks report. Global coarse grain supplies for 2010/11 are nearly unchanged with lower U.S. supplies offset by increased foreign coarse grain production. World corn production is lowered 6.4 million tons with the lower U.S. production and a 0.5-million-ton reduction for Russia only partly offset by increases for Argentina, Serbia, EU-27, and several Sub-Saharan Africa countries. Production for Argentina is raised 4.0 million tons on higher expected area as rising corn prices and favorable early season soil moisture support a rapid pace of early corn planting. Global barley production is lowered 1.4 million tons with reductions of 0.7 million tons for EU-27, 0.5 million tons for Russia, and 0.3 million tons for Canada. U.S. soybean exports are increased 35 million bushels to billion reflecting strong export sales and reduced export prospects for Argentina resulting from lower beginning stocks. Soybean crush is raised 15 million bushels to billion due to improved prospects for domestic soybean meal disappearance and to a small reduction in the projected soybean meal extraction rate. The September 1 soybean stocks estimate confirmed a third consecutive marketing year of relatively low residual use. For 2010/11 residual use is reduced to 32 million bushels, down 38 million from the previous estimate. U.S. Oilseed & Soybean Production for 2010/11 is projected at million tons, down 2 million from last month. Soybean production is forecast at billion bushels, down 75 million based on both lower harvested area and yield. Harvested area is reduced 1.2 million acres to 76.8 million. The soybean yield is projected at 44.4 bushels per acre, down 0.3 bushels. Soybean ending stocks are projected at 265 million bushels, down 85 million from last month. Sunflowerseed and peanut production are also projected lower this month while canola and cottonseed production are projected higher. Global oilseed 2010/11 production is projected at million tons, unchanged from last month. Global soybean production is projected at million tons, up 0.4 million. Brazil soybean production is raised to 67 million tons, up 2 million due to increased area. India soybean production is raised 0.4 million tons to 9.2 million, also due to increased harvested area. Global sunflowerseed production is reduced this month as lower production for Russia is only partly offset by an increase for Ukraine. Other changes include increased cottonseed production for Australia and India. Global oilseed stocks for 2010/11 are reduced 1.7 million tons to 71.4 million. Soybeans account for most of the change, with a reduction for the United States partly offset by projected increases for Brazil and China. U.S. wheat supplies for 2010/11 are projected 49 million bushels lower this month with lower estimated production and higher expected feed and residual use. Production is lowered 41 million bushels based on the Small Grains 2010 Summary report. Feed and residual use is raised 10 million bushels on higher-than-expected disappearance during the June-August quarter as indicated by the September 1 stocks. Global wheat stocks for 2010/11 are 1.0 million tons lower mostly reflecting lower production in the United States. World production for 2010/11 is projected at million tons, down 1.6 million tons from last month; however, beginning stocks are raised 0.6 million tons with upwardly revised 2009/10 production estimates for South America & Canada.

3 Corn 2009/10 corn balance sheet included an increase of ending stocks for 2009/10 by 322 million bushels based on the September 1 stocks estimate. U.S. Corn 2010/11 ending stocks forecast are estimated at 902 million bushels, 805 million bushels lower than the 2009/10 carry out for corn. USDA increased carry in, decreased expected production by 496 million and increased demand by 40 million for reduction in the 2010/11 carry out by 213 million. The season-average 2010/11 farm price is projected at a range of $4.60 to $5.40 per bushel compared with the 2009/10 forecast of $3.55 per bushel. USDA and raised the 2010/11 price by $0.60 on both the lower and upper end of the range. 2010/11 ending stocks of 902 million bushel estimates provides for a 6.7% carry out as compared to a 8.3% Carry Out / Use ratio last month and represents 24 days of usage as compared to 30 estimated last month. The early look is used to provide an idea that nearly 6 million more acres of corn may be needed next year to keep adequate corn stocks available using projected demand forecasts. Expected higher prices should throttle back demand from the forecast levels shown above.

4 Soybeans U.S. Soybean 2009/10 ending stocks essentially unchanged at million bushels this month. USDA WASDE Report U.S. Soybean 2010/11 ending stocks projected at 265 million a decrease of 85 million from last month but up 114 million as compared to 2009/10 ending stocks. USDA decreased harvested area by 1.2 million acres, decreased expected production 76 million and increased demand by 10 million. The U.S. season-average farm soybean price for 2010/11 is projected at $10.00 to $11.50 per bushel compared with $9.59 per bushel in 2009/10. USDA increased expected 2010/11 price range by $0.85 per bushel on both ends of the price range. Soybean meal prices are forecast at $290 to $330 per ton compared with $311 per ton for 2009/10. Soybean oil prices are projected at 39.5 to 43.5 cents per pound compared with cents for 2009/10. The 2010/11 ending stocks estimated of 265 million bushel provides for a 8.0% Carry Out / Use ratio for the 2010 crop year as compared to 10.6% last month and represents 29 days of usage as compared to 39 days last month. The early look is used to provide an idea that we could give up 700 thousand acres of soybeans next year and keep adequate but snug soybeans stocks available using projected demand forecasts. Expected higher prices should throttle back demand from the forecast levels shown above.

5 Wheat U.S. wheat ending stocks for 2009/10 are projected at 973 million bushels, up 43 million. 2010/11 U.S. wheat ending stocks projected at billion up 102 million even with higher expected domestic use. The U.S. season-average farm wheat price for 2010/11 is projected at $5.20 to $5.80 per bushel compared with $4.87 per bushel in 2009/10. USDA increased the 2010/11 expected price by $0.25 on the upper end and by $0.15 lower end of the range. The U.S wheat carry out of 853 million is considered burdensome, however world supply is also decreasing compared to last year at mmt is nearing the 2008/09 carry out of mmt. U.S. 2010/11 ending stocks estimated of 853 million bushel provides for a 34.9% Carry Out / Use ratio for the 2010 crop year as compared to 37.0% forecast last month and represents 127 days of usage as compared to 135 days forecast last month. The early look is used to provide an idea that we could have an increase of only 1.4 million more acres of wheat next year and keep adequate but snug wheat stocks available using projected demand forecasts. Expected higher prices should throttle back demand from the forecast levels shown above and expected higher corn prices will likely cut into planed spring wheat acres.

6 Year to Year Change Corn Stocks on September 1st 2010 Corn Stocks In its September 30th report, the USDA National Agricultural Statistical Service (NASS) estimated U.S. corn stocks in all positions on September 1, 2010 to be billion bushels (bb), up 2.0% from a year ago (Figure 1). The bb September 1st corn stocks figure was 301 mb or 21.4% larger than average pre-report expectations of private analysts, and greater than the upper end of the pre-report estimate range (i.e., from to bb). Of this total, bb were stored on farms, with bb stored off farms. Figure1. shows generally increasing trends for U.S. total supplies and quarterly corn stocks on December 1st, March 1 st since the mid-1990s, a slower rate of increase or leveling off of June 1st corn stocks, and steady to slightly lower September 1st corn stocks since MY September 1st U.S. corn stocks of bb was the largest amount of U.S. September 1st corn stocks since 2006, but still only moderately larger than the average (1.612 bb) and median (1.673 bb) U.S. September 1 st stocks estimates for MY through MY which have ranged from bb to bb.

7 Soybean Stocks on September 1st 2010 Soybean Stocks: The USDA NASS estimate of U.S. soybean stocks in all positions on September 1st 2010 totaled mb, up 9% from mb the previous year (Figure 3). This equaled pre-report estimates, and is smaller than the 11 year average September 1st U.S. soybean stocks estimate of 273 mb since MY , being the 3rd smallest for that period (i.e., larger than mb in MY and mb in MY ). Of the mb total, 35.4 mb were stored on farms, with mb stored off farms. Figure 3 shows generally increasing total supplies of U.S. soybeans since the late 1980s, but a recent trend toward decreasing quarterly September 1st stocks since Wheat Stocks on September 1st 2010 Wheat Stocks: It was estimated by USDA NASS that U.S. wheat stocks in all positions on September 1st 2010 totaled bb, up 11% from bb a year ago, and the largest amount of September 1st wheat stocks since MY (Figure 5). This September 1st U.S. wheat stocks figure was only 19 mb or 0.7% more than average pre-report expectations of private analysts, and within the range of pre-report estimates (i.e., to bb). Of this U.S. total, bb were stored on farms, with bb stored off farms on September 1st. Figure 5 shows increasing total supplies and increasing September 1st stocks of U.S. wheat since MY

8 Carry out Matrix The 2010/11 Corn Balance sheet matrix shows potential yield and acres scenarios. The 2010/11 Soybean Balance sheet matrix shows potential yield and acres scenarios. The 2010/11 Wheat Balance sheet matrix shows potential yield and acres scenarios. The RED highlighted matrix cells indicate stocks to use carry out ratio that typically has been considered tight.

9

10