10/12: Pro Farmer Reaction to USDA Reports

October 12, 2011 03:51 AM
 

 

 

 

** CROP PRODUCTION REPORT **

  • CORN: 12.433 billion bu.; trade expected 12.492 billion bu.
    -- compares to Sept. est. of 12.497 bil. bu; 12.447 bil. bu. in 2010
  • BEANS: 3.060 billion bu.; trade expected 3.094 billion bu.
    -- compares to Sept. est. of 3.085 bil. bu.; 3.329 bil. bu. in 2010
  • COTTON: 16.608 million bales; trade expected 16.03 million bales
    -- compares to Sept. est. of 16.56 mil. bales; 18.1 mil. bales in 2010

 

USDA's October Crop Production Report features an unchanged corn yield at 148.1 bu. per acre. That resulted in a corn crop estimate 59 million bu. below the average pre-report trade estimate and 64 million bu. below the September estimate. The drop in production is the result of a 452,000-acre cut to harvested acres from September (which is the partial result of a 385,000-acre drop in 2010 corn plantings). These estimates are right in line with our October updates, which included an unchanged corn yield of 147.9 bu. per acre and a cut to harvested acres of 388,000.

Looking at the state-by-state yields, it's a very mixed bag in yield trends from September. Yield declines were recorded in Illinois (down 2 bu. per acre, to 159 bu.); Missouri (down 5 bu., to 115 bu.); and N. Dakota (down 4 bu., to 121 bu. per acre). Yields were held steady in Indiana (145 bu. per acre); Kansas (105 bu.); Michigan (148 bu.); Minnesota (165 bu.); and Nebraska (160 bu. per acre). Yield increases from September were recorded in Iowa (up 2 bu., to 169 bu. per acre); Ohio (up 1 bu. to 154 bu.); S. Dakota (up 1 bu., to 139 bu.); and Wisconsin (up 3 bu., to 160 bu. per acre.)

The soybean crop estimate from USDA features a surprising drop in the national average yield, to 41.5 bu. per acre, down 0.3 bu. from September. Based on early harvests results, we anticipated a half-bushel increase from September, so the smaller-than-month-ago crop and yield estimates is a surprise to us. USDA now puts harvested soybean acres at 73.676 million, down 147,000 acres from September. The combination of fewer harvested acres and the smaller yield drop the bean crop estimate 25 million bu. from September, but it is 34 million bu. below the average pre-report trade estimate.

Looking at the state-by-state yields, declines from September were noted in Illinois (down 2 bu., to 46 bu.); Iowa (down 0.5 bu. to 50.5 bu.); Missouri (down 2 bu., to 37 bu.); and Nebraska (down 1 bu., to 54 bu. per acre). Yields were held steady in Arkansas (37 bu.); Indiana (42 bu.); Minnesota (41 bu.); and Ohio (46 bu.). The yield was increased from September in S. Dakota (up 1 bu., to 39 bu. per acre).

The cotton crop is the biggest surprise in the bunch. It is up just 48,000 bales from September, but is 578,000 bales above the average pre-report trade estimate. USDA now puts the national average cotton yield at 809 lbs. per acre, up 2 lbs. from September. Harvested acres were steady from September.


 

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

  • CORN: 866 million bu.; up from Sept. proj. of 672 million bu.
    -- compares to 1.128 billion bu. in 2010-11
  • BEANS: 160 million bu.; down from Sept. proj. of 165 million bu.
    -- compares to 215 million bu. in 2010-11
  • WHEAT: 837 million bu.; up from Sept. proj. of 761 million bu.
    -- compares to 861 million bu. in 2010-11
  • COTTON: 3.9 million bales; up from Sept. proj. of 3.4 million bales
    -- compares to 2.6 million bales in 2010-11

 

USDA increased estimated 2011-12 corn carryover 194 million bu. from September. Most of that increase was known from the September Grain Stocks Report, which put September 1 corn stocks at 1.128 billion bushels. The bigger-than-expected beginning stocks were partially offset by the smaller-than-month-ago crop estimate. Still, total supplies are now put at 13.576 billion bu., up 144 million bu. from September. On the demand side, USDA cut 50 million bu. from estimated exports, leaving the projection at 1.6 billion bushels. That cut total demand 50 million bu., to 12.71 billion bushels. The decrease in demand came despite a cut in the national average on-farm cash price to $6.20 to $7.20, down 30 cents on both ends of the range from September.

On old-crop, USDA cut 3 million bu. from imports and slashed 197 million bu. from feed & residual use. Food, seed & industrial use was also cut 15 million bu. from September.

For new-crop soybeans, carryover was cut 5 million bu. from September, the result of the smaller-than-month-ago crop. Total supplies are now put at 3.29 billion bu., down 35 million bu. from September. The lower supply was completely offset by a 40-million-bu. cut to exports (1.375 billion bushels). However, residual "use" was increased 9 million bu. from September to result in the 5-million-bu. cut to carryover. USDA now puts the national average on-farm cash soybean price at $12.15 to $14.15, down 50 cents on both ends of the range from September.

On old-crop, USDA made some minor tweaks to the soybean balance sheet. Exports were increased 5 million bu. (to 1.5 billion bu.), crush was cut 2 million bu. (to 1.648 billion bu.) and residual use was increased 7 million bu. (to 45 million bu.).

Wheat carryover is up 76 million bu. from September. Total supply is now put at 2.99 billion bu., down 57 million bu. from last month. On the demand side, USDA cut feed & residual use 80 million bu. (to 160 million bu.), exports were cut 50 million bu. (to 975 million bu.) and seed use was cut 4 million bu., (to 78 million bushels). These are some dramatic changes from last month... and the cut to feed & residual use should catch the attention of corn traders, as well. USDA now puts the national average on-farm cash wheat price at $7.10 to $7.90, down 25 cents on the bottom end and down 45 cents on the top end of the range from September.

Cotton carryover is up 500,000 bales from September. Total supplies of 19.22 million bales is up 50,000 bales from last month. On the demand side, USDA slashed total use 450,000 bales from September. A 500,000-bale cut to exports was partially offset by a 50,000-bale increase in unaccounted use. The national average on-farm cash cotton price is now projected at 87.5 cents to $1.025, up 2.5 cents on the bottom, but down 2.5 cents on the top end of the range.


** 2011-12 GLOBAL CARRYOVER **

  • CORN: 123.19 MMT; up from 117.39 MMT in Sept.
    -- compares to 129.76 MMT in 2010-11
  • BEANS: 63.01 MMT; up from 62.55 MMT in Sept.
    -- compares to 69.26 MMT in 2010-11
  • WHEAT: 202.37 MMT; up from 194.59 MMT in Sept.
    -- compares to 195.6 MMT in 2010-11
  • COTTON: 54.83 mil. bales; up from 51.91 mil. bales in Sept.
    -- compares to 44.87 million bales in 2010-11

 

The increase in global carryover estimates will limit price support from the smaller-than-expected domestic corn and bean crop estimates.


** 2011-12 GLOBAL PRODUCTION HIGHLIGHTS**

  • ARGENTINA BEANS: 53.0 MMT; compares to 53.0 MMT in September
    -- compares to 49.0 MMT in 2010-11
  • BRAZIL BEANS: 73.5 MMT; compares to 73.5 MMT in September
    -- compares to 75.5 MMT in 2010-11
  • ARGENTINA WHEAT: 13.5 MMT; compares to 13.5 MMT in September
    -- compares to 15.0 MMT in 2010-11
  • AUSTRALIA WHEAT: 26.0 MMT; compares to 25.0 MMT in September
    -- compares to 26.0 MMT in 2010-11
  • CHINA WHEAT: 117.0 MMT; compares to 117.0 MMT in September
    -- compares to 115.18 MMT in 2010-11
  • CANADA WHEAT: 24.2 MMT; compares to 24.0 MMT in September
    -- compares to 23.17 MMT in 2010-11
  • EU-27 WHEAT: 136.33 MMT; compares to 135.79 MMT in September
    -- compares to 135.61 MMT in 2010-11
  • RUSSIA WHEAT: 56.0 MMT; compares to 56.0 MMT in September
    -- compares to 41.51 MMT in 2010-11
  • FSU-12 WHEAT: 110.45 MMT; compares to 107.45 MMT in September
    -- compares to 80.97 MMT in 2010-11
  • CHINA CORN: 182.00 MMT; compares to 178.0 MMT in September
    -- compares to 177.25 MMT in 2010-11
  • ARGENTINA CORN: 27.5 MMT; compares to 27.5 MMT in September
    -- compares to 22.5 MMT in 2010-11
  • SOUTH AFRICA CORN: 12.5 MMT; compares to 12.5 MMT in September
    -- compares to 11.8 MMT in 2010-11
  • BRAZIL CORN: 61.0 MMT; compares to 61.0 MMT in September
    -- compares to 57.5 MMT in 2010-11
  • CHINA COTTON: 33.5 mil. bales; compares to 34.0 mil. bales in Sept.
    -- compares to 30.50 mil. bales in 2010-11

** WHAT ARE THE CALLS? **

Following yesterday's strong gains, traders are calling corn to open 3 to 5 cents higher, soybeans 5 to 10 cents higher and wheat steady to 3 cents higher.


  

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