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Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

USDA Report on 11/10/09

Nov 10, 2009




 Corn Production Down 1 Percent from October Forecast             
            Soybean Production Up 2 Percent                        
            Cotton Production Down 4 Percent                       
                                                                               
Corn production is forecast at 12.9 billion bushels, down 1 percent from last month
 but 7 percent higher than 2008.  Based on conditions as of November 1,
yields are expected to average 162.9 bushels per acre, down 1.3 bushels from
October but 9.0 bushels above last year.  Despite the drop in yield from
October, this yield will be the highest on record if realized.  Total
production will be second highest on record, only behind 2007.  Within the
Corn Belt, forecasted yields in Minnesota and Wisconsin increased, while
Illinois, Iowa, and Michigan yields decreased.   
                                                                               
Soybean production is forecast at a record high 3.32 billion bushels, up
2 percent from the October forecast and up 12 percent from last year.  Based
on November 1 conditions, yields are expected to average 43.3 bushels per
acre, up 0.9 bushel from last month and up 3.6 bushels from 2008.  If
realized, this will be the highest U.S. yield on record.  Compared with last
month, yields are forecast higher or unchanged in all States except Arkansas,
Georgia, Iowa, Mississippi, and Texas.  Increases of 3 bushels are expected
in Delaware, Indiana, Kansas, and Maryland.  The largest decrease in yield
from the October forecast is expected in Mississippi where excessive rain
during October hindered yield expectations.  If realized, the forecasted
yield in Alabama, Kansas, Kentucky, Nebraska, Ohio, and Pennsylvania will be
a record high and the forecasted yield in Georgia, Maryland, and North
Carolina will tie the previous record high.  Area for harvest in the U.S. is
forecast at 76.6 million acres, unchanged from last month but up 3 percent
from 2008.
                                                                               
All Cotton production is forecast at 12.5 million 480-pound bales, down
4 percent from last month and down 2 percent from last year.  Upland cotton
production is forecast at 12.1 million 480-pound bales, down 4 percent from
last month and down 2 percent from last year.  Forecasted yield in the Delta
region decreased due to continual wet weather.  Texas producers expect lower
yields due to the effects of the cool, wet weather on the late planted crop. 
Upland growers in Georgia, North Carolina, and Oklahoma are expecting record
high yields.  The American-Pima production forecast, at 367,000 bales, was
carried forward from the August 2009 forecast.


OILSEEDS:  U.S. oilseed ending stocks for 2009/10 are
projected at 8.8 million tons, up 1.1 million from last month as
larger supplies are only partly offset by increased exports. 
Oilseed crush is almost unchanged as a small increase for
soybeans is offset by a reduction for cottonseed.  Total U.S.
oilseed production is projected at 97.8 million tons, up 1.7
million from last month due to higher soybean production. 
Soybean production is forecast at a record 3.319 billion
bushels, up 69 million from last month.  The soybean yield is
projected at a record 43.3 bushels per acre, up 0.9 bushels
from the previous estimate.  Soybean exports are raised 20
million bushels to 1.325 billion due to increased supplies and
increased global import demand, mainly for China, EU-27, and
Russia.  Soybean ending stocks are projected at 270 million
bushels, up 40 million from last month.

Prices for soybeans and products are projected higher for
2009/10, reflecting higher corn and soybean futures prices. 
The U.S. season-average soybean price range is projected at
$8.20 to $10.20 per bushel, up 20 cents on both ends of the
range.  The soybean meal price is projected at $250 to $310
per short ton, up 5 dollars on both ends of the range.  The
soybean oil price range is projected at 33 to 37 cents per
pound, up 1 cent on both ends of the range.

Global oilseed production for 2009/10 is projected at 428.9
million tons, up 3.6 million from last month.  Increased soybean
and rapeseed production are only partly offset by lower
sunflowerseed, cottonseed, and peanut production.  Global
soybean production is projected higher with increases for the
United States, Brazil, Argentina, Paraguay, and Uruguay. 
Brazil soybean production is projected at a record 63 million
tons, up 1 million from last month due to an expected increased
harvested area.  Argentina soybean production is raised 0.5
million tons to 53 million due to increased area as producers
shift additional area to soybeans from sunflowerseed. 
Argentina sunflowerseed production is reduced due to lower
planted area resulting from dry conditions during the planting
season.  Global rapeseed production is projected higher as
increased production for EU-27 is only partly offset by a
reduction for Canada.  Other changes include higher
sunflowerseed production for Ukraine and EU-27, and lower
cottonseed production for China.

Global oilseed stocks for 2009/10 are raised 3.1 million tons to
69.0 million.  Increased soybean stocks for Brazil, the United
States, and China account for most of the change.  Rapeseed
stocks for Canada, EU-27, and India are also increased.  China
soybean imports are raised for 2008/09 and 2009/10 to 41.1
million and 40.5 million tons, respectively.  Soybean exports for
2009/10 are raised for Brazil and Argentina.  Global vegetable
oil stocks are projected 1 million tons higher due to increases in
soybean oil stocks for Brazil, China, and India, and increased
palm oil stocks for China and Malaysia.


WHEAT:  U.S. wheat supplies for 2009/10 are reduced 4
million bushels this month with small downward revisions to
hard red spring wheat and durum production.  Exports are
projected 25 million bushels lower based on the slow pace
of export sales and shipments and increased competition
from major Black Sea exporters.  U.S. ending stocks for
2009/10 are projected 21 million bushels higher.  Ending
stocks would be a 10-year high at the projected 885 million
bushels.  The projected marketing-year average farm price
range is narrowed 10 cents on both ends of the range to
$4.65 to $5.05 per bushel.  Recent gains in futures prices
have supported farm gate prices while limiting export
opportunities for U.S. wheat.

Global wheat supplies for 2009/10 are projected 1.7 million
tons higher as increased production more than offsets a
reduction in beginning stocks.  Foreign production is raised
3.9 million tons with most of the increase in FSU-12 as an
extended growing season and favorable harvest weather
boosted yields.  Production is raised 2.0 million tons each
for Kazakhstan and Russia as harvest results indicate
higher yields for spring wheat.  Ukraine production is raised
0.5 million tons reflecting late season revisions to winter
wheat yields.  Production is raised 0.8 million tons for Syria
as increased use of irrigation raised yields.  Chile production
is also raised 0.3 million tons on higher reported area. 
Production is lowered 1.1 million tons for EU-27 with
reductions for France, the United Kingdom, Italy, and Spain
more than offsetting small increases elsewhere.  Production
is also lowered 0.5 million tons for Canada as above normal
precipitation and below normal temperatures during October
delayed harvesting and raised the potential for field losses,
particularly in northern Saskatchewan.

Global wheat trade for 2009/10 is projected higher this
month.  Imports are raised for EU-27, Israel, South Korea,
Syria, Turkey, Bangladesh, and China more than offsetting
reductions for Chile and Angola.  Higher exports for Russia,
up 1.5 million tons, and Kazakhstan and Ukraine, each up
0.5 million tons, are partly offset by reductions for EU-27
and Canada, down 1.0 and 0.5 million tons, respectively. 
Abundant supplies of low-priced Black Sea wheat are
expected to limit export opportunities for the traditional
exporting countries including Canada, EU-27, and the
United States.  Global consumption is raised with increased
wheat feeding expected in Russia, Israel, South Korea, and
Morocco.  Global ending stocks are projected 1.5 million
tons higher as the increase in world output more than
offsets lower carryin and the relatively small increase in
consumption. 

COARSE GRAINS:  U.S. feed grain supplies for 2009/10
are projected lower this month reflecting lower forecast corn
production.  Corn production is forecast 97 million bushels
lower with a 1.3-bushel-per-acre reduction in the forecast
yield.  U.S. corn exports are projected 50 million bushels
lower reflecting the slow pace of sales and shipments in
recent weeks and prospects for increased competition from
larger Black Sea corn and wheat supplies.  U.S. corn ending
stocks are projected down 47 million bushels.  The 2009/10
marketing-year average farm price projection is raised 20
cents on each end of the range to $3.25 to $3.85 per
bushel.  Barley ending stocks are raised 5 million bushels
mostly reflecting a drop in projected exports based on the
slow pace of sales and shipments to date.  Reflecting the
higher expected corn price, marketing-year average farm
prices are projected higher for sorghum, barley, and oats. 

Global coarse grain supplies for 2009/10 are projected 2.0
million tons lower, as reduced corn beginning stocks and
production are only partly offset by higher EU-27 mixed
grain, barley, and oat production, and higher Kazakhstan
barley production.  Global corn beginning stocks for 2009/10
are lowered 0.9 million tons mostly reflecting higher 2008/09
feed use for EU-27 and higher food, seed, and industrial
use for South Africa.  Global corn production for 2009/10 is
lowered 2.8 million tons with reduced production for the
United States, Brazil, EU-27, Russia, Venezuela, and
Canada only partly offset by increases for South Africa and
Ukraine.  Brazil production is reduced 1.0 million tons on
lower expected area.  Production is lowered 0.4 million tons
for EU-27 and 0.3 million tons each for Russia and
Venezuela.  Production is raised 1.0 million tons for South
Africa as producer intentions indicate higher planted area
and abundant early season rains support timely planting. 
Ukraine production is raised 1.0 million tons on higher
reported yields.

World coarse grain trade is projected slightly lower for
2009/10 mostly reflecting reduced prospects for U.S. corn
and barley exports.  Barley exports are also reduced for the
EU-27, down 0.2 million tons.  Partly offsetting is a 1.0-
million-ton increase in Ukraine corn exports. Corn imports
are lowered 0.3 million tons for Israel with higher expected
wheat feeding.  Barley imports are lowered 0.2 million tons
for Jordan with lower expected feeding.  Global coarse grain
ending stocks are lower this month with a 3.8-million-ton
reduction in world corn stocks.  Much of the decrease is
based on this month’s U.S. changes, however, other major
reductions in 2009/10 corn ending stocks are projected for
EU-27, down 1.7 million tons, and Brazil, down 0.8 million
tons.  Barley ending stocks are projected higher for EU-27
and Kazakhstan, up 1.1 million tons and 0.4 million tons,
respectively.

SUGAR:  Special note: Historically, the Sweetener Market Data
(SMD) published by the Farm Service Agency (FSA) contains
Amiscellaneous@ use, including values for intra-industry sales less
receipts, refining losses, and residual inventory adjustments reported by
sugarbeet and sugarcane processors and cane sugar refiners.  The
September 2009 SMD explains a new method of estimating imported
refined sugar in an effort to reduce an increasingly large negative SMD
miscellaneous use. FSA will apply the new method to SMD data
beginning with 2009/10.  In order to maintain consistency across years,
the AFood@ and AMiscellaneous@ categories for U.S. sugar use in the
WASDE report are combined for 2007/08, 2008/09, and 2009/10.

Projected 2009/10 U.S. sugar supply is increased 180,000
tons, raw value, from last month.  Lower production is more
than offset by higher beginning stocks and higher imports from
Mexico.  Beet sugar production is reduced 300,000 tons based
on lower forecast sugarbeet production and lower projected
sugar recovery.  Cane sugar production is lowered 12,000 tons
based on processor reports of lower harvest area in Hawaii and
forecast lower sugarcane production in Texas.  Despite higher
forecast sugarcane yields in Louisiana, sugar production is
unchanged due to excessive rains during harvest, reducing
anticipated sugar recovery.  Sugar use is unchanged.

Ending stocks for 2008/09 are increased 227,000 tons from last
month=s estimate, according to final SMD data.  With a small
reduction in final total supply, total use is reduced 251,000
tons, reflecting mostly lower combined food and miscellaneous
uses.

For Mexico, 2009/10 domestic sugar use is lowered 240,000
metric tons, raw value, while exports are raised by the same
amount.  The lower use of sugar in Mexico results from
updated analysis of macroeconomic factors affecting per capita
sweetener use.


RICE:  U.S. rice production in 2009/10 is forecast at 218.2
million cwt, 2.4 million below last month due to a decrease in
yield.  Average yield is estimated at 7,038 pounds per acre,
down 77 pounds from last month.  Harvested area is
unchanged at 3.10 million acres.  Long-grain rice production is
lowered 1.7 million cwt to 152.5 million, while combined
medium- and short-grain production is down 0.7 million to 65.7
million.  Imports, domestic and residual use, and exports are
unchanged from a month ago.  Ending stocks are projected at
44.2 million cwt, down 2.4 million from last month and the
largest stocks since 1986/87.

The all rice season-average farm price is forecast at $13.85 to
$14.85 per cwt, up $0.85 per cwt on both ends of the range. 
The long-grain season-average farm price range is projected at
$12.50 to $13.50 per cwt, up $0.75 per cwt on each end of the
range.  The combined medium- and short-grain farm price
range is projected at $18.00 to $19.00 per cwt, up $0.50 per
cwt on each end.  The increase in prices is based on monthly
farm prices reported by the National Agricultural Statistics
Service (NASS) through mid-October and a number of other
factors including the expectation that world prices will continue
to be supported by increased trade prospects in India and the
Philippines.  A smaller U.S. crop will also be supportive. 
Additionally, the higher prices are supported in part by the
prospects for lower production in South America, principally in
Brazil and Uruguay.  Continuing Egyptian export restrictions are
also contributing to higher prices, particularly for medium-grain
rice.  The weakening dollar is also contributing to higher
commodity prices.

Global 2009/10 rice production and consumption are lowered
from a month ago, while imports are raised.  World production
is forecast at 432.1 million tons, down 1.6 million from last
month due mainly to decreases for Brazil, India, the Philippines,
and the United States.  India’s 2009/10 crop is projected at 83.0
million tons, down 1.0 million from last month and the smallest
crop since 1997/98.  Global consumption is lowered from a
month ago due mainly to decreases for India and the
Philippines.  The 2009/10 import projection is raised 860,000
tons, mainly due to larger imports for Afghanistan, Brazil, India,
and the Philippines.  Global ending stocks for 2009/10 are
projected at 85.9 million tons, nearly the same as last month,
but a decrease of 4.8 million from the 2008/09 estimate. 

LIVESTOCK, POULTRY, AND DAIRY:  Total U.S. meat
production for 2009 is raised as fourth-quarter pork and beef
production is forecast higher on larger-than-expected October
output.  Broiler production is raised due to higher-than-
expected third-quarter production; forecast fourth-quarter
production is unchanged from last month.  Turkey production is
decreased on weaker third-quarter production, and forecast
lower fourth-quarter slaughter.  Egg production is little changed.

Meat production for 2010 is lowered from last month as higher
forecast beef production due to larger feedlot placements in
2009 is more than offset by lower forecasts for broilers and
turkey.  Broiler and turkey hatchery data points to a smaller
than previously forecast expansion in 2010.

Red meat and poultry export forecasts for 2009 and 2010 are
raised.  Beef exports are forecast higher for the last half of
2009 and for 2010 on a weak dollar outlook, and improved
economic outlook next year.  Poultry exports are raised for
third-quarter 2009.  Import forecasts for beef for both 2009 and
2010 are reduced reflecting lower expected beef supplies in
Oceania. 

Cattle price forecasts are unchanged for 2009 and 2010.  The
hog price forecast is raised for fourth quarter 2009, but is
unchanged for 2010.  Broiler prices are lowered for 2009 and
2010.  The egg price forecast is increased slightly for 2009 as
fourth-quarter prices have been higher than expected but the
forecast is unchanged for 2010.

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