PF Reaction to March Report: A "Non-event"

March 9, 2012 02:14 AM

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

  • CORN: 801 million bu.; unch from Feb. proj. of 801 million bu.
    -- compares to 1.128 billion bu. in 2010-11
  • BEANS: 275 million bu.; unch from Feb. proj. of 275 million bu.
    -- compares to 215 million bu. in 2010-11
  • WHEAT: 825 million bu.; down from Feb. proj. of 845 million bu.
    -- compares to 862 million bu. in 2010-11
  • COTTON: 3.9 million bales; up from Feb. proj. of 3.8 mil. bales
    -- compares to 2.6 million bales in 2010-11


For corn, USDA made no change on the supply or demand side of the balance sheet. With no change to Argentine corn production, there was little reason to increase estimated U.S. corn exports to offset what the market expected to be lost global supply from South America. USDA's national average on-farm cash price projection is now $5.90 (up a dime from February) to $6.50 (down a dime).

For soybeans, USDA made minor -- almost ridiculous -- changes to the Supply & Demand table. The supply side is unchanged, but USDA cut estimated 2011-12 seed use 1 million bu. and offset that with a 2-million-bu. increase in residual use. Rounding of the numbers left carryover unchanged from February. USDA's national average on-farm cash price projection is now $11.40 to $12.60, up 30 cents on both ends of the range from February.

For wheat, USDA left the supply side unchanged from February. On the demand side, USDA cut estimated food use 5 million bu., but more than offset that with a 25-million-bu. increase to estimated old-crop exports. That dropped old-crop carryover 20 million bu. from February. USDA now puts the national average on-farm cash price at $7.15 to $7.45, unchanged from February.

For cotton, USDA added 100,000 bales to estimated carryover. On the supply side, USDA increased total supply 10,000 bales with a like increase in estimated imports. On the demand side, USDA cut domestic use 100,000 bales, which was slightly offset with a 10,000-bale cut to unaccounted use. The result is an unexpected uptick in carryover. USDA's national average price is 88 (up a penny from February) to 93 cents (unchanged).

Bottom line: Today's Supply & Demand Report was enough of a non-event that traders will now focus very clearly on the March 30 Prospective Plantings Report.

** 2011-12 GLOBAL CARRYOVER **

  • CORN: 124.53 MMT; down from 125.35 MMT in Feb.
    -- compares to 129.07 MMT in 2010-11
  • BEANS: 57.3 MMT; down from 60.28 MMT in Feb.
    -- compares to 68.76 MMT in 2010-11
  • WHEAT: 209.58 MMT; down from 213.1 MMT in Feb.
    -- compares to 199.49 MMT in 2010-11
  • COTTON: 62.32 mil. bales; up from 60.77 mil. bales in Feb.
    -- compares to 47.26 million bales in 2010-11


  • ARGENTINA BEANS: 46.5 MMT; compares to 48.0 MMT in February
    -- compares to 49.0 MMT in 2010-11
  • BRAZIL BEANS: 68.5 MMT; compares to 72.0 MMT in February
    -- compares to 75.5 MMT in 2010-11
  • ARGENTINA WHEAT: 14.5 MMT; compares to 14.5 MMT in February
    -- compares to 16.1 MMT in 2010-11
  • AUSTRALIA WHEAT: 29.5 MMT; compares to 28.3 MMT in February
    -- compares to 27.89 MMT in 2010-11
  • CHINA WHEAT: 117.92 MMT; compares to 117.92 MMT in February
    -- compares to 115.18 MMT in 2010-11
  • CANADA WHEAT: 25.26 MMT; compares to 25.26 MMT in February
    -- compares to 23.17 MMT in 2010-11
  • EU-27 WHEAT: 137.49 MMT; compares to 137.49 MMT in February
    -- compares to 135.67 MMT in 2010-11
  • RUSSIA WHEAT: 56.23 MMT; compares to 56.23 MMT in February
    -- compares to 41.51 MMT in 2010-11
  • FSU-12 WHEAT: 114.3 MMT; compares to 114.41 MMT in February
    -- compares to 81.06 MMT in 2010-11
  • CHINA CORN: 191.75 MMT; compares to 191.75 MMT in February
    -- compares to 177.25 MMT in 2010-11
  • ARGENTINA CORN: 22.0 MMT; compares to 22.0 MMT in February
    -- compares to 23.75 MMT in 2010-11
  • SOUTH AFRICA CORN: 12.0 MMT; compares to 12.5 MMT in February
    -- compares to 10.92 MMT in 2010-11
  • BRAZIL CORN: 62.0 MMT; compares to 61.0 MMT in February
    -- compares to 57.5 MMT in 2010-11
  • CHINA COTTON: 33.5 mil. bales; compares to 33.5 mil. bales in February
    -- compares to 30.5 mil. bales in 2010-11


Surprisingly, there is a fairly significant change in the 2010-11 corn crop estimate for Argentina. Last month, USDA had last year's Argentine corn crop at 22.5 MMT, but increased the size of the 2010 corn crop there to 23.75 MMT. Also surprisingly, USDA gives no explanation of why it increased a 2010-11 crop estimate by 1.25 MMT.


Based on overnight trade and this morning's USDA Supply & Demand update, traders are looking for wheat to open 3 to 5 cents higher with soybeans up 5 to 10 cents. Calls in the corn pit are uncertain. After posting gains overnight, the lack of a cut to the 2011-12 Argentine corn crop estimate or U.S. carryover could force the market to open mixed with old-crop slightly higher and new-crop slightly lower.



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