The corn market took no fresh news as bad news after USDA issued its April supply-demand estimates.
"The surprise, if any, was no change in corn," Mike Krueger, The Money Farm, said on an MGEX conference call after USDA issued the report.
"Most people thought that because March 1 stocks were 150 to 200 million bushels below average trade estimates, people expected the feed and residual category today would be increased and ending supplies would be reduced," he said. However, USDA did not change projected carryover.
For soybeans, said Krueger, "The market pretty much got exactly what the pre-report guesses were looking for."
Declining U.S. soybean stocks, drought reductions in South American crops, and Chinese soybean demand have combined to make soybeans the market leader.
"One if the big questions is, 'Can you have $14 soybeans and $5 or $5.25 December corn?'" said Krueger. "You can, but probably not for very long."
In Minnesota and the Dakotas, acreage likely will gravitate toward soybeans, probably at the expense of wheat and crops such as sunflowers, flax, and dry edible beans.
"Seed companies say they are seeing more interest in soybeans," he said. And he expects double-cropping from soft red winter wheat to add to the soybean acreage indicated in the March Prospective Plantings report. "Nationwide, I think these prices will drag some acreage back to soybeans," he said.
"The soybean market has already leaped into the next marketing year," in view of prospects for 1 million fewer acres planted than last year, said Krueger. Even with good yields, and assuming increased Chinese demand in 2012-13, soybean supplies are likely to be tightening at the end of 2012-13.
USDA's supply-demand projections won't reach into the 2012-13 year until next month.
USDA Soybean Projections
- U.S. soybean exports for 2011-12 are up 15 million bushels this month to 1.29 billion, partly in response to reduced South American crops.
- Domestic crush is up 15 million bushels to 1.63 billion, reflecting stronger-than-expected demand.
- Ending stocks, projected at 250 million bushels, are down 25 million from last month. Trade estimates averaged 246 million bushels.
- The season-average soybean price range is projected at $12 to $12.50/bu., narrowed from $11.40 to$12.60 last month. The midpoint of projected season-average prices is up $20 for meal to $345/ton and up 1 cent for oil to 53.5 cents per pound.
- Carryover stayed at 801 million bushels, but the average ending stocks prediction from analysts was about 720 million bushels.
- USDA narrowed its season-average corn price projection by a dime on each end to $6 to $6.40/bu.
- Projected ethanol demand stayed at 5 billion bushels. Energy Information Administration (EIA) data indicate that average daily ethanol use fell to a 23-month low in January and ethanol stocks reached a new record high. Daily ethanol production fell during February and March, to its low since early last fall.
- Feed and residual use is unchanged at 4.6 billion bushels. USDA noted that March 1 stocks indicated September-February feed and residual use was down from a year earlier. USDA expects wheat feeding to increase in summer and says new-crop corn may be available in August.
Cash Corn Tight
Some people likely will assume, based on the supply-demand numbers, that the corn market has peaked for this crop year, said Krueger.
However, he said ethanol processors and feedlot operators have trouble finding corn in the past couple of months, and the cash corn market in the next couple of months will determine what stocks are available.
"I don't think the old-crop corn market is finished yet," said Krueger. "I don't think we have rationed demand as much as we need to."
See all of the data, coverage and analysis of today's World Agricultural Supply and Demand Estimates and Crop Production reports.