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PF Reaction: USDA Views 801 Million Bu. as 'Pipeline Supplies' for Corn

April 10, 2012
 
 

** 2011-12 U.S. CARRYOVER **

  • CORN: 801 million bu.; unch from March proj. of 801 million bu.
    -- compares to 1.128 billion bu. in 2010-11
  • BEANS: 250 million bu.; down from March proj. of 275 million bu.
    -- compares to 215 million bu. in 2010-11
  • WHEAT: 793 million bu.; down from March proj. of 825 million bu.
    -- compares to 862 million bu. in 2010-11
  • COTTON: 3.4 million bales; down from March proj. of 3.9 mil. bales
    -- compares to 2.6 million bales in 2010-11

 

April marks the third consecutive month with an estimated 2011-12 corn carryover of 801 million bu. and a stocks:use ratio of 6.3%. That apparently, is the lowest USDA will go with its old-crop corn carryover estimate this year. March 1 corn stocks came in about 140 million bu. below trade expectations, which should have resulted in a lower carryover forecast in this Supply & Demand update. Because USDA has made no changes to the supply or demand side of the balance sheets in the last two months, we should now assume USDA views 801 million bu. as "pipeline supplies." It will take a demand-side "shock" to the market to move the needle from 801 million bu. going forward. Nonetheless, today's old-crop corn carryover projection is 84 million bu. above the average pre-report trade estimate. USDA now sees a national average on-farm cash corn price of $6.00 to $6.40, narrowing the range by a dime on both ends.

Soybean carryover was cut 25 million bu. from March and came in just 4 million bu. above the average pre-report trade estimate. USDA made no change on the supply side of the balance sheet. On the demand side, USDA increased projected old-crop soybean crush 15 million bu. (to 1.63 billion bu.) and increased projected old-crop soybean exports 15 million bu. (to 1.29 billion bushels). Those gains in use were partially offset by a 1-million-bu. cut to projected seed use and a 4-million-bu. cut to projected residual use. USDA now sees a national average on-farm cash soybean price of $12.00 to $12.50, up 60 cents on the bottom end of the range and down a dime on the top end of the range from last month.

Old-crop wheat carryover was cut 32 million bu. from March and came in 3 million bu. below the average pre-report trade estimate. USDA made no changes on the supply side of the balance sheet. On the demand side, USDA increased projected old-crop feed & residual use 35 million bushels. That more than offset a 25-million-bu. cut to wheat feed & residual use USDA made in the February S&D Report. USDA also cut 3 million bu. from projected 2011-12 wheat seed use in today's update. USDA narrowed the national average on-farm cash price range a nickel on both ends of the range from March, putting the range at $7.20 to $7.40.

Cotton carryover was cut 500,000 bales from March. USDA is still adjusting the size of the 2011 U.S. cotton crop and cut last year's production by 119,000 bales. On the demand side, USDA increased projected old-crop cotton exports by 400,000 bales. That was partially offset by a 20,000-bale decrease in unaccounted use, which puts the "use" category at negative 30,000 bales. USDA now sees a national average on-farm cash price of 89 cents to 93 cents, up a penny on the bottom of the range and steady on the top end of the range from March.


** 2011-12 GLOBAL CARRYOVER **

  • CORN: 122.71 MMT; down from 124.53 MMT in March
    -- compares to 125.02 MMT in 2010-11
  • BEANS: 55.52 MMT; down from 57.3 MMT in March
    -- compares to 69.12 MMT in 2010-11
  • WHEAT: 206.27 MMT; down from 209.58 MMT in March
    -- compares to 198.72 MMT in 2010-11
  • COTTON: 66.07 mil. bales; up from 62.32 mil. bales in March
    -- compares to 50.51 million bales in 2010-11

 

The downtick in global corn carryover is the result of smaller production forecasts for Argentina and South Africa. The downtick in global soybean carryover is the result of smaller production projections for Argentina and Brazil, as well as a smaller U.S. carryover estimate.

The drawdown in global wheat supplies is primarily the result of a smaller U.S. carryover forecast.

Cotton is where the global carryover forecast gets "weird." USDA says, "The forecast for 2011-12 world cotton ending stocks is raised sharply this month, due partly to historical adjustments for India that increase beginning stocks by 3.25 million bales and ending stocks by 1.6 million bales."


** 2011-12 GLOBAL PRODUCTION HIGHLIGHTS **

  • ARGENTINA BEANS: 45.0 MMT; compares to 46.5 MMT in March
    -- compares to 49.0 MMT in 2010-11
  • BRAZIL BEANS: 66.0 MMT; compares to 68.5 MMT in March
    -- compares to 75.5 MMT in 2010-11
  • ARGENTINA WHEAT: 14.5 MMT; compares to 14.5 MMT in March
    -- compares to 16.1 MMT in 2010-11
  • AUSTRALIA WHEAT: 29.5 MMT; compares to 29.5 MMT in March
    -- compares to 27.89 MMT in 2010-11
  • CHINA WHEAT: 117.92 MMT; compares to 117.92 MMT in March
    -- compares to 115.18 MMT in 2010-11
  • CANADA WHEAT: 25.26 MMT; compares to 25.26 MMT in March
    -- compares to 23.17 MMT in 2010-11
  • EU-27 WHEAT: 137.49 MMT; compares to 137.49 MMT in March
    -- compares to 135.67 MMT in 2010-11
  • RUSSIA WHEAT: 56.23 MMT; compares to 56.23 MMT in March
    -- compares to 41.51 MMT in 2010-11
  • FSU-12 WHEAT: 114.3 MMT; compares to 114.3 MMT in March
    -- compares to 81.06 MMT in 2010-11
  • CHINA CORN: 191.75 MMT; compares to 191.75 MMT in March
    -- compares to 177.25 MMT in 2010-11
  • ARGENTINA CORN: 21.5 MMT; compares to 22.0 MMT in March
    -- compares to 23.6 MMT in 2010-11
  • SOUTH AFRICA CORN: 11.5 MMT; compares to 12.0 MMT in March
    -- compares to 10.92 MMT in 2010-11
  • BRAZIL CORN: 62.0 MMT; compares to 62.0 MMT in March
    -- compares to 57.4 MMT in 2010-11
  • CHINA COTTON: 33.5 mil. bales; compares to 33.5 mil. bales in March
    -- compares to 30.5 mil. bales in 2010-11

** WHAT ARE THE CALLS? **

Not surprisingly, the calls for corn from the trading floor are mixed following this morning's USDA S&D update. Those "just" looking at how the carryover forecast of 801 million bu. compares to the average pre-report trade estimate are calling corn 3 to 5 cents lower. However, those that realize USDA's corn carryover estimate has hit "rock bottom" are calling corn 3 to 5 cents higher. Soybeans are expected to open 8 to 15 cents higher and wheat is called 4 to 8 cents higher.


 

 

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