PF Reaction: Basis and USDA's Corn Carryover Don't Align

May 10, 2012 03:48 AM
 

** WINTER WHEAT PRODUCTION **

 

  • ALL WHEAT: 2.245 billion bu.; trade expected 2.196 billion bu.
    -- compares to 1.999 billion bu. in 2011
  • ALL WINTER WHEAT: 1.694 billion bu.; trade expected 1.634 bil. bu.
    -- compares to 1.494 billion bu. in 2011
  • HRW: 1.032 million bu.; trade expected 990 million bu.
    -- compares to 780 million bu. in 2011
  • SRW: 428.3 million bu.; trade expected 413 million bu.
    -- compares to 458 million bu. in 2011
  • WHITE WINTER: 233.2 million bu.; trade expected 231 million bu.
    -- compares to 256 million bu. in 2011

 

The hard red winter wheat crop estimate came in 42 million bu. above the average pre-report trade estimate and the soft red winter wheat crop estimate is about 15 million bu. above the pre-report trade guess. Even the white wheat estimate came in just slightly above the average pre-report trade estimate. That pushed the all wheat production projection 49 million bu. above the average pre-report trade estimate. The all wheat national average yield is projected at 45.7 bu. per acre. The winter wheat yield estimate is 47.6 bu. per acre.


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

  • CORN: 851 million bu.; up from April proj. of 801 million bu.
    -- compares to 1.128 billion bu. in 2010-11
  • BEANS: 210 million bu.; down from April proj. of 250 million bu.
    -- compares to 215 million bu. in 2010-11
  • WHEAT: 768 million bu.; down from April proj. of 793 million bu.
    -- compares to 862 million bu. in 2010-11
  • COTTON: 3.4 million bales; unch from April proj. of 3.4 mil. bales
    -- compares to 2.6 million bales in 2010-11

 

Despite very strong corn basis across the country suggesting corn supplies are exceptionally tight (and getting tighter), USDA increased estimated old-crop corn carryover. In the report commentary, USDA says, "Projected corn ending stocks for 2011-12 are raised 50 million bu. to 851 million with lower expected June-August feed and residual disappearance. The large year-to-year increase in winter wheat production and attractive prices for wheat relative to corn are expected to raise summer wheat feeding. Record mid-April corn plantings and early May crop emergence boost prospects for early 2012-crop corn usage before the September 1 beginning of the 2012-13 marketing year. As in recent years, this late-summer new-crop usage is expected to displace old-crop usage and boost carryout."

Simply put, "old-crop" carryover isn't just old-crop corn any more. Instead of projecting what the supply of old-crop corn will be on Sept. 1, 2012, USDA's World Board is simply projecting the level of Sept 1. corn stocks, regardless of when the corn was grown.

USDA cut estimated old-crop corn feed & residual use 50 million bu. and made no other changes to the balance sheet. That is strong evidence the World Board analysts want to see ALL old-crop corn export sales leave the continent before they raise the old-crop export "forecast."

USDA now puts the 2011-12 national average on-farm cash price for corn at $5.95 to $6.25, up a nickel on the bottom and down a quarter on the top end of the range from last month.

Old-crop soybean carryover came in 11 million bu. below the average pre-report trade estimate and is down 40 million bu. from last month. USDA made no changes on the supply side of the balance sheet.

For old-crop soybean demand, USDA increased estimated crush 15 million bu., (to 1.645 billion bu.) and exports 25 million bu. (to 1.315 billion bushels). USDA now sees a national average old-crop cash price of $12.35, compared to a range of $12.00 to $12.50 last month.

For wheat, USDA cut 25 million bu. from last month. The estimate is also 13 million bu. below the average pre-report trade estimate. No changes were made to old-crop wheat supply and the only change on the demand side was a 25-million-bu. increase in estimated exports, to 1.025 billion bushels. USDA now puts the national average on-farm cash old-crop wheat price at $7.25, compared to a range of $7.20 to $7.40 last month.

For old-crop cotton, carryover is unchanged from last month. USDA now puts the national average on-farm cash old-crop cotton price at 91 cents, compared to a range of 89 to 93 cents last month.


** 2012-13 U.S. CARRYOVER **

  • CORN: 1.881 billion bu.; trade expected 1.704 billion bu.
  • BEANS: 145 million bu.; trade expected 170 million bu.
  • WHEAT: 735 million bu.; trade expected 805 million bu.
  • COTTON: 4.9 million bales.

 

USDA's first "official" look at the new-crop marketing year for corn features a national average yield projection of 166 bu. per acre. That's 2 bu. above the trendline yield used in USDA's Outlook Forum S&D projections. USDA also puts harvested corn acres at 89.1 million acres. That seems just a bit high -- that means 92.9% of planted acres would be harvested. However, the bigger the total plantings, the higher the harvested acreage percentage should be this early in the process. Reason: We only need "so many" corn acres for silage.

The above-trend average yield puts USDA's first 2012-13 corn crop projection at a record 14.790 billion bushels. Total supplies are projected at 15.656 billion bushels (up 2.144 billion bu. from this year). Total use is projected at 13.775 billion bushels (up 1.12 billion bu. from this year). Usage increases are expected for feed and residual (up 900 million bu., to 5.45 billion bu.); food, seed & industrial (up 25 million bu., to 6.425 billion bu.); and exports (up 200 million bu., to 1.9 billion bushels). USDA's first projection of the 2012-13 national average on-farm cash corn price is $4.20 to $5.00.

New-crop soybean carryover came in 25 million bu. below the average pre-report trade estimate and is projected down 65 million bu. from this year. USDA is projecting a national average yield of 43.9 bu. per acre, resulting in a crop of 3.205 billion bushels. Total supplies are estimated at 3.430 billion bu., up 144 million bu. from this year.

On the demand side, USDA projects total new-crop use of 3.285 billion bu., up 209 million bu. from this year. USDA increased crush to 1.655 billion bu. (up 10 million bu. from this year); increased exports to 1.505 billion bu. (up 190 million bu. from this year); and made minor upside adjustments to seed and residual use from this year. USDA's first new-crop national average on-farm cash soybean price projection is $12.00 to $14.00.

Despite a bigger-than-expected wheat crop estimate, USDA's 2012-13 first wheat crop carryover projection came in 70 million bu. below the average pre-report trade estimate. Total supplies are projected at 3.133 billion bu., up 151 million bu. from last year. Total use is projected at 2.398 billion bu., up 184 million bu. from this year. USDA projects new-crop feed and residual wheat use of 230 million bu., up 50 million bu. from this year. Exports are projected at 1.15 billion bu., up 125 million bu. from this year. USDA projects a national average on-farm cash price of $5.50 to $6.70.

New-crop cotton carryover is expected to climb 1.5 million bales from this year. USDA projects a national average yield of 777 lbs. per acre and a crop of 17 million bales. That will put total supplies at 20.41 million bales, up 2.22 million bales from this year. Total use is expected to reach 15.5 million bales, up 700,000 bales from this year. Exports are expected to increase 600,000 bales from this year, to 12.0 million bales. USDA projects a national average on-farm cash cotton price of 65 cents to 85 cents.



** 2011-12 GLOBAL CARRYOVER **
  • CORN: 127.56 MMT; up from 122.71 MMT in April
    -- projection of 152.34 MMT for 2012-13
  • BEANS: 53.24 MMT; down from 55.52 MMT in April
    -- projection of 58.07 MMT for 2012-13
  • WHEAT: 197.03 MMT; down sharply from 206.27 MMT in April
    -- projection of 188.13 MMT for 2012-13
  • COTTON: 66.88 mil. bales; up from 66.07 mil. bales in April
    -- projection of 73.75 mil. bales in 2012-13

** 2011-12 GLOBAL PRODUCTION HIGHLIGHTS **

  • ARGENTINA BEANS: 42.5 MMT; compares to 45.0 MMT in April
    -- projection of 55.0 MMT for 2012-13
  • BRAZIL BEANS: 65.0 MMT; compares to 66.0 MMT in April
    -- projection of 78.0 MMT for 2012-13
  • ARGENTINA WHEAT: 14.5 MMT; compares to 14.5 MMT in April
    -- projection of 12.0 MMT for 2012-13
  • AUSTRALIA WHEAT: 29.5 MMT; compares to 29.5 MMT in April
    -- projection of 26.0 MMT for 2012-13
  • CHINA WHEAT: 117.92 MMT; compares to 117.92 MMT in April
    -- projection of 120.0 MMT for 2012-13
  • CANADA WHEAT: 25.26 MMT; compares to 25.26 MMT in April
    -- projection of 27.0 MMT for 2012-13
  • EU-27 WHEAT: 137.38 MMT; compares to 137.49 MMT in April
    -- projection of 132.0 MMT for 2012-13
  • RUSSIA WHEAT: 56.23 MMT; compares to 56.23 MMT in April
    -- projection of 56.0 MMT for 2012-13
  • FSU-12 WHEAT: 114.42 MMT; compares to 114.3 MMT in April
    -- projection of 97.76 MMT for 2012-13
  • CHINA CORN: 191.75 MMT; compares to 191.75 MMT in April
    -- projection of 193.0 MMT for 2012-13
  • ARGENTINA CORN: 21.5 MMT; compares to 21.5 MMT in April
    -- projection of 25.0 MMT for 2012-13
  • SOUTH AFRICA CORN: 11.5 MMT; compares to 11.5 MMT in April
    -- projection of 13.0 MMT for 2012-13
  • BRAZIL CORN: 67.0 MMT; compares to 62.0 MMT in April
    -- projection of 67.0 MMT for 2012-13
  • CHINA COTTON: 33.5 mil. bales; compares to 33.5 mil. bales in April
    -- projection of 30.5 mil. bales for 2012-13

** WHAT ARE THE CALLS? **

Opening calls are all over the place this morning. Corn calls range from 10 to 15 cents lower to 3 to 5 cents higher. Soybeans are called 15 to 30 cents higher, while wheat calls range form 4 to 6 cents lower to 3 to 5 cents higher.


 

 

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