USDA tightened the U.S. supply-and-demand outlook for both old- and new-crop corn but left the soybean numbers pretty much unchanged in its June World Agricultural Supply and Demand Estimates.
The report provided a brief diversion in what has become a major weather market.
"The numbers will be looked at as neutral, maybe a little negative, and the trade will now go back to trading weather," says Randy Martinson, Progressive Ag, Fargo, North Dakota. Martinson was the commentator on a post-report conference call hosted my MGEX, Minneapolis.
USDA raised the season-average farm price for corn by 10 cents per bushel to $4.40 to $5.20 and lowered corn production by 135 million bushels to 14 billion. The department also decreased the average corn yield by 1.5 bushels to 156.5 bushels per acre due to excessively wet conditions, a move that was largely anticipated.
"It’s too early to tell exactly what yields are going to be. The market will be focused like a laser beam on weather—as it has been—going forward," says Greg Wagner, president of GWX Ag Advisors, Riverside, Illinois, who was a commentator on a pre-report CME Group press briefing. "A shortage of precipitation in July will have a greater negative impact on corn prices than excess precipitation."
USDA also reduced the estimated new-crop carryout by 55 million bushels to 1.949 billion bushels, well above the average trade estimate of 1.795 billion bushels. Projected planted corn acreage was left unchanged at 97.3 million acres.
The lower than expected decrease in new-crop ending stocks sent corn prices sharply lower following the release of the report, but prices began to recover after the brief sell-off.
"Despite rapid planting progress during mid-May across the Corn Belt, rains and cool temperatures since have delayed the completion of planting in parts of the western Corn Belt and raised the likelihood that seasonally warmer temperatures and drier conditions in late July will adversely affect pollination and kernel set in a larger share of this year’s crop," writes USDA in its latest WASDE report.
Due to corn’s reduced production prospects, USDA also lowered projected U.S. new-crop corn demand by 70 million bushels. The department lowered projected feed and residual disappearance 125 million bushels. At the same time, corn used in ethanol production, however, was raised 50 million bushels.
Status Quo for Beans
USDA left the overall projected supply and demand picture for soybeans unchanged from last month’s estimates, but cut soybean exports for 2012-13 to 1.33 billion.
"USDA cut old-crop soybean exports by 20 million bushels, which I was surprised to see even though there have been cancellations from China," says Martinson.
Both projected planted acreage and yield for soybeans were unchanged from last month’s report at 77.1 million acres and 44.5 bushels per acre. Soybean ending stocks for 2012-13 are projected at 125 million bushels, unchanged from last month. Projected new-crop carryout was also unchanged at 265 million bushels. USDA raised the 2013-14 season-average price for soybeans by 25 cents to $9.75 to $11.75 per bushel.
"Planting is still a concern with 22 million acres of soybeans and 5 million acres of corn yet to be planted," notes Martinson. "I was surprised to see USDA did not make a change to the soybean yield due to late planting."
While late planting can be a concern for yield, Terry Roggensack with the Hightower Report notes that in 2008 only 78% of the soybean crop was planted at this time, yet that year saw a record-high soybean yield.
As of the week ended June 9, only 71% of the nation’s beans were planted, compared with a five-year average of 84%.
Coverage, Analysis of the June 12 USDA Reports
See all of the data, coverage and analysis of the WASDE and Crop Production reports.