A Breakdown of USDA's 2012-13 Projections -- With My Thoughts

February 24, 2012 01:55 AM

What Traders are Talking About:

* USDA releases first 2012-13 supply/demand tables. Initial projections for the 2012-13 market year:

Corn: 94 million planted acres; 87 million harvested acres; 164 bu. per acre yield; record 14.27 billion bu. crop; 15.086 total supply; 13.470 billion bu. total use (5.2 billion bu. feed and residual; 6.37 billion bu. food, seed and industrial use, including 4.95 billion bu. ethanol grind; 1.9 billion bu. exports); 1.616 billion bu. carryover; $5 average on-farm cash price.

Beans: 75 million planted acres; 74.1 million harvested acres; 43.9 bu. per acre yield; 3.25 billion bu. crop; 3.54 billion bu. total supply; 3.335 billion bu. total use (1.66 billion bu. crush; 1.55 billion bu. exports; 89 million bu. seed; 37 million bu. residual); 205 million bu. carryover; $11.50 average on-farm cash price.

Wheat: 58 million planted acres; 48.7 million harvested acres; 44.5 bu. per acre yield; 2.165 billion bu. crop; 3.130 billion bu total supply; 2.173 billion bu. total use (1.198 billion bu. domestic use; 975 million bu. exports); 957 million bu. carryover; $6.30 average on-farm cash price.

The long and short of it: These are initial projections from USDA, meaning they will change a lot before the 2012-13 marketing year is complete. Still, the figures will get a lot of market attention, especially on the corn side, with USDA projecting ending stocks to double amid the projected record production.

* My analysis of USDA's initial 2012-13 projections.

Corn: The planted acreage figure is not a surprise as virtually everyone is looking for corn seedings to jump around 2 million acres from last year. The yield is a trendline figure. It will be hard to get that high, in my opinion, with that many planted acres unless weather is really good. Pro Farmer is currently using a national average yield of 160 bu. per acre for 2012-13 to account for "fringe" acres coming into production and the dryness in key areas. Weather and its impact on yield is the key variable for the 2012 growing season.

Beans: A steady planted acreage figure compared with year-ago is not a surprise. Pro Farmer is currently using a 42 bu. per acre national average yield, so our crop size is smaller. But we also have a smaller total usage projection -- USDA is currently more aggressive than us on 2012-13 soybean exports. If total use doesn't recover as much as USDA projects, carryover could rise from 2011-12 -- even if the national average yield comes in lower than USDA's initial peg.

Wheat: USDA's wheat plantings are too high, in my opinion, at 3.6 million more than last year. Winter wheat acres are up 1.3 million, meaning spring wheat acres are projected to rise 2.3 million from year-ago. Many Northern Plains' producers I've talked to indicate they are planning to increase corn plantings more than spring wheat.


Follow me on Twitter: @BGrete

Need a speaker for a seminar or special event? Contact me: bgrete@profarmer.com

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