Room for USDA to raise its corn and soybean export projections... China remained a buyer of old-crop soybeans in this morning's weekly sales update and the report showed corn export bookings well ahead of the pace needed to reach USDA's export forecast. As a result, traders expect USDA to raise its corn and soybean export projections in the Feb. 10 Supply & Demand Report. Following is a snapshot of how exports are stacking up. We compare how USDA's export forecast is performing against its Weekly Export Performance Indicator.
Corn: With 30 weeks left in the 2013-14 marketing year, total corn bookings are running 145% ahead of year-ago. USDA projects exports at 1.45 billion bu., which is up 98.4% from the previous marketing year. USDA reports total bookings (sales plus shipments) as a percent of total exports are at 91%, which compares to 76% last year at this time and a five-year average of 64%.
Soybeans: With 30 weeks left in the 2013-14 marketing year, total soybean bookings are running 26% above year-ago. USDA projects exports of 1.495 billion bu., which represents a 13.3% increase from the previous marketing year. USDA reports total bookings as a percent of total exports are at 106%, which compares to 94% last year and the five-year average of 85%.
Typically by now, China begins to cancel U.S. soybean sales as it turns its attention to available Brazilian supplies. China has more than 5.8 MMT of unshipped U.S. soybeans on the books, an increase of 88% from last year at this time. Meanwhile, accumulated exports to China of nearly 21.9 MMT are up 23.2% from year-ago. Additionally, China has booked more than 2.3 MMT of U.S. soybeans for 2014-15, compared to no new-crop sales on the books at this time last year. We expect China to eventually cancel some 2013-14 U.S. soybean purchases, but the question is when and how much?
Wheat: With 17 weeks left in the 2013-14 marketing year, total wheat bookings are running 27% ahead of year-ago. USDA projects wheat exports at 1.125 billion bu., up 11.7% from last season. Total commitments are at 87% of USDA's export forecast, which is ahead of the five-year average of 84% and last year's pace of 80%. This data suggests there is more room for USDA to raise its wheat export projection, although they could wait another month to monitor bookings before adjusting the figure.
CPC sees ENSO-neutral into spring, but... The National Oceanic and Atmospheric Administration's Climate Prediction Center (CPC) says ENSO-neutral continued in January and are expected to linger through the spring, but it says an increasing number of models suggest El Nino could build this summer. Forecasters say El Nino increases the odds of above-trendline corn and soybean yields.
"Strong surface westerly winds in the western Pacific and the slight eastward shift of above-average temperatures in the subsurface western Pacific potentially portend warming in the coming months," says CPC. "However, the spring is also historically associated with lower forecast skill, so the chance of El Nino developing after the spring is not much different from ENSO-neutral. The consensus forecast is for ENSO-neutral to continue through the Northern Hemisphere spring 2014."
Drought areas see slight expansion... According to the National Drought Monitor, drought covers 56.55% of the contiguous U.S., which compares to 56.25% last week. Drought increased slightly in the South, Midwest, High Plains and West regions. In addition, the monitor shows 37.38% of the country in moderate drought or worse, compared to 36.49% last week. Click here for related maps.
Attaché sees 20% reduction in 2014 Canadian crop... The U.S. ag attaché in Canada says total production of wheat, barley, oats and corn is forecast to fall 20% in 2014 from last year's record crop to 52 MMT. The attaché says large old-crop supplies and a weaker Canadian dollar, combined with strong world demand, should keep exports above average levels in 2014-15.
Specifically, the attaché expects 2014-15 wheat area to decline by 12% from last year for a crop of 27 MMT, which would be down 27% from 2013-14. Barley production is forecast at 8.7 MMT, a 15% decline from 2013-14. Read more at this link.
2013 crop insurance payouts close in on $10 billion... Crop insurance indemnities for 2013 crop losses rose to just shy of $10 billion at $9.995 billion for the week ended Feb. 3, according to Risk Management Agency (RMA) data. Corn continues to lead all payouts on a by-crop basis at $4.378 billion, with wheat next at $2.236 billion. Soybean payouts also moved over the $1-billion mark with indemnities of $1.004 billion as of Feb. 3. Cotton remains below the $1-billion threshold at $879 million.
Payouts under the crop insurance program reached record levels in 2008, 2011 and 2012 but are unlikely to repeat that in 2013. If payouts for 2013 rise by the same percentage seen last year from this point to the current final figure, that would put 2013 payouts around $12 billion, which would still have them at the second highest point for the program. For more details and perspective, click here.