PF Reaction to 'Boring' February Report

February 9, 2012 02:44 AM
 

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

  • CORN: 801 million bu.; down from Jan. proj. of 846 million bu.
    -- compares to 1.128 billion bu. in 2010-11
  • BEANS: 275 million bu.; unch from Jan. proj. of 275 million bu.
    -- compares to 215 million bu. in 2010-11
  • WHEAT: 845 million bu.; down from Jan. proj. of 870 million bu.
    -- compares to 862 million bu. in 2010-11
  • COTTON: 3.8 million bales; up from Jan. proj. of 3.7 mil. bales
    -- compares to 2.6 million bales in 2010-11

 

Old-crop corn carryover was cut 45 million bu. from January, but it is still 4 million bu. above the average pre-report trade estimate. Total supplies are up 5 million bu. from January after USDA increased projected imports 5 million bu. from last month. USDA also increased its export forecast 50 million bu., resulting in the 45-million-bu. cut to projected 2011-12 corn carryover. USDA now puts the national average on-farm cash price at $5.80 (up a dime) to $6.60 (down a dime from last month).

Soybean carryover is unchanged from January and is just 6 million bu. above the average pre-report trade estimate. USDA made no changes on the supply or demand side of the balance sheet from January. The only change is in the price, but even the midpoint of the range is unchanged. The range now stands at $11.10 (up 15 cents) to $12.30 (down 15 cents) compared to the January price range estimate.

Wheat carryover is down 25 million bu. from January and is 23 million bu. below the average pre-report trade estimate. USDA made no changes on the supply side of the balance sheet and increased exports 25 million bu. to drop projected 2011-12 wheat carryover by that amount. USDA now puts the national average on-farm cash price at $7.15 (up 20 cents from last month) to $7.45 (unchanged).

Cotton carryover is up 100,000 bales from last month and is 360,000 bales above the average pre-report trade estimate. Traders expected cotton carryover to be cut to 3.44 million bales, but USDA's estimate went in the opposite direction. USDA made no changes on the supply side of the balance sheet, but cut 100,000 bales from projected domestic use to increase carryover 100,000 bales. USDA now puts the national average on-farm cash cotton price at 87 cents (up 1 cent from last month) to 93 cents (down a penny from January).


** 2011-12 GLOBAL CARRYOVER **

  • CORN: 125.35 MMT; down from 128.14 MMT in Jan.
    -- compares to 128.83 MMT in 2010-11
  • BEANS: 60.28 MMT; down from 63.43 MMT in Jan.
    -- compares to 68.9 MMT in 2010-11
  • WHEAT: 213.1 MMT; up from 210.02 MMT in Jan.
    -- compares to 200.7 MMT in 2010-11
  • COTTON: 60.77 mil. bales; up from 58.35 mil. bales in Jan.
    -- compares to 46.99 million bales in 2010-11

** 2011-12 GLOBAL PRODUCTION HIGHLIGHTS **

  • ARGENTINA BEANS: 48.0 MMT; compares to 50.5 MMT in January
    -- compares to 49.0 MMT in 2010-11
  • BRAZIL BEANS: 72.0 MMT; compares to 74.0 MMT in January
    -- compares to 75.5 MMT in 2010-11
  • ARGENTINA WHEAT: 14.5 MMT; compares to 14.5 MMT in January
    -- compares to 16.1 MMT in 2010-11
  • AUSTRALIA WHEAT: 28.3 MMT; compares to 28.3 MMT in January
    -- compares to 27.89 MMT in 2010-11
  • CHINA WHEAT: 117.92 MMT; compares to 117.92 MMT in January
    -- compares to 115.18 MMT in 2010-11
  • CANADA WHEAT: 25.26 MMT; compares to 25.26 MMT in January
    -- compares to 23.17 MMT in 2010-11
  • EU-27 WHEAT: 137.49 MMT; compares to 137.49 MMT in January
    -- compares to 135.67 MMT in 2010-11
  • RUSSIA WHEAT: 56.23 MMT; compares to 56.23 MMT in January
    -- compares to 41.51 MMT in 2010-11
  • FSU-12 WHEAT: 114.41 MMT; compares to 114.18 MMT in January
    -- compares to 81.29 MMT in 2010-11
  • CHINA CORN: 191.75 MMT; compares to 191.75 MMT in January
    -- compares to 177.25 MMT in 2010-11
  • ARGENTINA CORN: 22.0 MMT; compares to 26.0 MMT in January
    -- compares to 22.5 MMT in 2010-11
  • SOUTH AFRICA CORN: 12.5 MMT; compares to 12.5 MMT in January
    -- compares to 10.92 MMT in 2010-11
  • BRAZIL CORN: 61.0 MMT; compares to 61.0 MMT in January
    -- compares to 57.5 MMT in 2010-11
  • CHINA COTTON: 33.5 mil. bales; compares to 33.5 mil. bales in January
    -- compares to 30.5 mil. bales in 2010-11

While USDA's forecasts for Argentine corn and soybeans were cut from January, the projections remain above trade consensus estimates of about 20 MMT for corn and 46 MMT for soybeans. While we don't anticipate much movement in the consensus estimate for corn, don't be surprised if "trade thinking" on Argentine soybean production starts to inch up a bit (closer to USDA's estimate) after recent rains.


** WHAT ARE THE CALLS? **

Based on the "boring" Supply & Demand Report, traders are looking for corn to open near steady, soybeans down 2 to 4 cents and wheat down 1 to 3 cents.


 

 

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