PF Reaction: Surprised USDA Didn't Raise its Soybean Export Projection

December 11, 2012 02:20 AM
 

CROP PRODUCTION

COTTON: 17.257 million bales; trade expected 17.6 million bales
-- compares to 17.447 million bales in Nov.; 15.674 million bales in 2011

USDA made no changes to planted or harvested cotton acres. The 190,000-bale reduction in estimated production was the result of a smaller yield. USDA now estimates the national average cotton yield at 793 lbs. per acre, down 9 lbs. from November, but still 3 lbs. higher than the 2011 yield.

 

2012-13 U.S. CARRYOVER

CORN: 647 million bu.; unch from Nov. proj. of 647 million bu.
-- compares to 988 million bu. in 2011-12

BEANS: 130 million bu.; down from Nov. proj. of 140 million bu.
-- compares to 169 million bu. in 2011-12

WHEAT: 754 million bu.; up from Nov. proj. of 704 million bu.
-- compares to 743 million bu. in 2011-12
COTTON: 5.4 million bales; down from Nov. proj. of 5.8 million bales

-- compares to 3.35 million bales in 2011-12

USDA made no changes to either the supply or demand side of the corn supply and demand table. The surprise here is that USDA opted to leave projected corn exports at 1.15 billion bu. even though the current export pace is running woefully behind the "required" pace. The only change USDA made was to the national average on-farm cash price, which is now projected at $6.80 to $8.00. That's down 15 cents on the top end of the range and down 25 cents on the bottom end of the range from November.

USDA made no changes to total soybean supplies this month. On the demand side of the balance sheet, projected crush was raised 10 million bu. from last month to 1.57 billion bushels. The surprise is that USDA did not up its soybean export projection despite the sales pace running well above what's needed to hit USDA's export forecast of 1.345 billion bushels. USDA now forecasts the national average on-farm cash price at $13.55 to $15.55, down 35 cents on both ends of the range compared to November.

USDA left wheat supplies unchanged from last month. On the usage side, USDA decreased exports 50 million bu. to 1.05 billion bushels. That 50-million-bu. reduction was added straight to the bottom line, pushing carryover up to 754 million bushels. USDA now projects the national average on-farm cash price at $7.70 to $8.30, down a nickel on the bottom end of the range and down 15 cents on the top end from last month.

For cotton, total supplies were decreased 190,000 bales from last month thanks to the smaller crop estimate. On the usage side, USDA raised projected exports 200,000 bales to 11.8 million bales. Unaccounted use was also raised 10,000 bales. The result: 2012-13 ending stocks are projected 400,000 bales lower than last month. USDA now projects the national average on-farm cash price at 65 cents to 71 cents, up a penny on the bottom end of the range and down a penny on the top end from last month.

 

 

2012-13 GLOBAL CARRYOVER

CORN: 117.61 MMT; down slightly from Nov. proj. of 117.99 MMT
-- compares to 131.04 MMT in 2011-12
BEANS: 59.93 MMT; down slightly from Nov. proj. of 60.02 MMT
-- compares to 56.00 MMT in 2011-12
WHEAT: 176.95 MMT; up from Nov. proj. of 174.18 MMT
-- compares to 195.77 MMT in 2011-12
COTTON: 79.64 mil. bales; down from Oct. proj. of 80.27 mil. bales
-- compares to 69.18 mil. bales in 2011-12

 

2012-13 GLOBAL PRODUCTION HIGHLIGHTS

ARGENTINA BEANS: 55.0 MMT; compares to 55.0 MMT in November
-- compares to 41.0 MMT for 2011-12
BRAZIL BEANS: 81.0 MMT; compares to 81.0 MMT in November
-- compares to 66.5 MMT for 2011-12
ARGENTINA WHEAT: 11.5 MMT; compares to 11.5 MMT in November
-- compares to 15.5 MMT for 2011-12
AUSTRALIA WHEAT: 22.0 MMT; compares to 21.0 MMT in November
-- compares to 29.92 MMT for 2011-12
CHINA WHEAT: 120.6 MMT; compares to 118.0 MMT in November
-- compares to 117.4 MMT for 2011-12
CANADA WHEAT: 27.2 MMT; compares to 26.7 MMT in November
-- compares to 25.29 MMT for 2011-12
EU-27 WHEAT: 131.73 MMT; compares to 131.82 MMT in November
-- compares to 137.23 MMT for 2011-12
RUSSIA WHEAT: 38.0 MMT; compares to 38.0 MMT in November
-- compares to 56.23 MMT for 2011-12
FSU-12 WHEAT: 77.79 MMT; compares to 77.79 MMT in November
-- compares to 114.8 MMT for 2011-12
CHINA CORN: 208.0 MMT; compares to 200.0 MMT in November
-- compares to 192.78 MMT for 2011-12
ARGENTINA CORN: 27.5 MMT; compares to 28.0 MMT in November
-- compares to 21.0 MMT for 2011-12
SOUTH AFRICA CORN: 13.5 MMT; compares to 13.5 MMT in November
-- compares to 12.42 MMT for 2011-12
BRAZIL CORN: 70.0 MMT; compares to 70.0 MMT in November
-- compares to 73.0 MMT for 2011-12
CHINA COTTON: 31.5 mil. bales; compares to 31.5 mil. bales in November
-- compares to 33.10 mil. bales for 2011-12

The headliners on global production are increases to wheat production (Australia, China and Canada), the sharp rise in Chinese corn production (up 8 MMT from November) and the 500,000-MT reduction in the Argentine corn crop. The increases in wheat production and the Chinese corn crop were anticipated. The reduction to the Argentine corn crop forecast was based on lower planted acres due to flooding problems in the country.

 

MARKET REACTION

Corn futures rallied around 7 cents in the first five minutes of trade following the report release, but are back trading at pre-report levels -- down mostly 3 to 5 cents. Soybean futures also rallied around 7 cents immediately following the report release, but have more than erased those gains and are now trading below pre-report levels -- down mostly 5 to 9 cents. Wheat futures initially spiked higher on support from corn and soybeans, but that support quickly faded and the market is now trading mostly 12 to 15 cents lower in Chicago, mostly 11 to 13 cents lower in Kansas City and mostly 5 to 8 cents lower in Minneapolis.

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