USDA’s December World Agricultural Supply and Demand Estimates held some surprises for corn and soybean analysts, particularly steady corn and soybean production numbers in Argentina and record corn production in China.
"Usually the December report is a yawner," says Louise Gartner with Spectrum Commodities, Beavercreek, Ohio. Gartner was the commentator a post-report MGEX conference call.
USDA left its U.S. corn production estimate unchanged at 10.725 billion bushels and held its U.S. average yield forecast steady at 122.3 bushels per acre. Estimated ending stocks for corn of 647 million bushels were also unchanged, which was lower than the average trade estimate of 666 million bushels.
Despite the steady crop numbers, USDA lowered its U.S. seasonal average farm price for corn to a range of $6.80 to $8/bu., a drop of 15 cents on the low end of the range and 25 cents on the top end. The change pushed the average U.S. corn price to $7.40/bu.
"Corn exports have been terrible," says Gartner. "The quality of our corn is suspect, and there have been complaints out of Southeast Asia." Southeast Asian nations, some of which are key buyers of U.S. corn, have been particularly concerned about aflatoxin levels, she says.
"Getting the corn to the Gulf is also an issue," says Gartner. Low water levels in the Mississippi River, caused by severe drought conditions in the heartland, have slowed barge movement and commercial river traffic could come to a halt if conditions don’t improve.
USDA raised world corn production 9.4 million tons, primarily due to a large bump in China, where corn output increased 8 million tons to a record high of 208 million metric tons. Both strong price incentives and favorable rainfall this past summer also pushed corn yields to record highs in China. Other countries with increased corn production include Canada, up 1.5 million tons, and Russia up 1 million tons. North Korea and Chile saw smaller increases.
Offsetting increases in corn production were declines in Argentina, Moldova, and Ukraine, where production fell 500,000 tons each.
USDA’s forecast for soybean production was unchanged from November at 2.971 billion bushels. The department also left its U.S. average soybean yield estimate unchanged at 39.3 bushels per acre
Ending stocks for soybeans, however, were lowered by 10 million bushels to 130 million bushels due to a stronger crush. Estimated ending stocks are now 39 million bushels lower than last year and slightly lower than the average trade estimate of 135 million bushels.
Despite lower ending stocks, USDA lowered its forecast for soybean prices by 35 cents on both ends of the range to $13.55 to $15.55/bu., which put the 2012-13 average price at $14.55.
USDA raised world soybean production slightly, from 267.6 million metric tons in November to 267.72 million metric tons this month. World ending stocks were lowered from 60.02 million metric tons in November to 59.93 million metric tons in December.
USDA left soybean production estimates for Brazil and Argentina basically unchanged, with Brazil’s output at 81 million metric tons and Argentina’s at 55 million metric tons.
Most analysts were expecting a shift in production in Argentina from corn to soybeans due to rain-delayed planting. In next month’s report, due to be released January 11, Gartner expects USDA to lower Argentina corn production and increase soybean production. Brazil’s production levels will likely remain unchanged, she adds.