What will be the important changes in Friday's World Agricultural Supply and Demand Estimates? Here's what the experts are watching.
Producers are greeting this week’s sunshine with renewed optimism hoping they will finally be able to get into their fields to plant corn without risking much if any yield potential.
"It’s like the beginning of the Daytona 500. The engines are running and as soon as the flag is waved, boom, they will be out planting," says Chad Hart, agricultural economist at Iowa State University.
Hart says if producers can get their corn seeded by the end of next week, they will still have a shot at obtaining 95 to 100% of yield potential.
When USDA releases its monthly World Agricultural Supply and Demand Estimates (WASDE) on Friday, analysts expect few, if any, market-moving changes.
Allendale, an Illinois-based brokerage services firm, expects USDA to lower its average 2013 corn yield estimate by 4 bushel per acre to 159.4 bushels due to delayed planting. "A 4-bushel-per acre reduction in yield sounds exciting, but I can’t make a bullish case for it," says Rich Nelson, chief strategist at Allendale.
If corn producers don’t get corn planted by the end of next week, though, Nelson says some acreage intended for corn could start shifting into soybeans. However, for him to reduce yield expectations to a level that would turn the trend for corn higher, Nelson argues that average yield expectations would have to drop to between 152 and 154 bushels per acre.
"At that level, I could make a slightly bullish case for prices compared to today’s levels," says Nelson.
Exports at Four-Decade Lows
USDA’s forecast for U.S. corn exports are at levels not seen since the 1970s, and USDA could reduce them further in the May WASDE report, says Hart. In the 1970s, U.S. producers were just beginning to sell their production overseas.
"We’ve seen a dramatic cut in exports compared to five years ago," says Hart. "It shows how quickly international demand can shift as buyers turn to other cheaper feed grains."
Hart expects USDA to lower exports but raise ethanol use by an offsetting amount, leaving old-crop corn stocks tight. Allendale expects USDA to raise old-crop ending stocks of corn to 762 million bushels, up from USDA’s last estimate of 757 bushels.
Changes in the soybean crop will likely be even less dramatic, according to analysts, who will be watching to see whether USDA shifts any corn acreage into soybeans and whether exports are slowing even more than anticipated.
"South America is getting product shipped, and China, in particular, is starting to grab South American beans, which was supposed to happen earlier," notes Hart. For the marketing year, USDA’s latest projection for U.S. soybean exports was 1.35 billion bushels. To date, U.S. exporters have sold 1.33 billion bushels.
Allendale expects USDA to leave both soybean acreage and average yield unchanged, but says the department will likely cut its estimates for South America soybean production. "A 1-million-ton drop is not a big deal," says Nelson.
For More Information
AgWeb will have full coverage of Friday's USDA World Agricultural Supply and Demand Estimates and Crop Production reports, following their 11 a.m. release.