PF Special -- Reaction to USDA's February 2014 Reports

February 10, 2014 05:28 AM


Ahead of the reports, March corn futures were trading 1 1/2 cents higher and December futures were up 1 1/4 cents. After an initial surge to the upside, prices are basically back to pre-report levels. March soybean futures fell sharply on disappointment from the steady carryover estimate and swung from 7 cents higher ahead of the report to about 8 cents lower in post-report trade. Soft red winter wheat futures were steady ahead of the data and are now trading about a nickel higher on the surprising cut to carryover. March cotton futures were about 90 points higher ahead of the report, but are now posting slight losses.



2013-14 U.S. CARRYOVER

CORN: 1.481 billion bu.; down from Jan. proj. of 1.631 billion bu.
-- compares to 824 million bu. in 2012-13
BEANS: 150 million bu.; unch. from Jan. proj. of 150 million bu.
-- compares to 141 million bu. in 2012-13
WHEAT: 558 million bu.; down from Jan. proj. of 608 million bu.
-- compares to 718 million bu. in 2012-13
COTTON: 3.0 million bales; unch. from Jan. proj. of 3.0 million bales
-- compares to 3.9 million bales in 2012-13

Traders expected the old-crop corn carryover estimate to be cut about 25 million bu. from the January estimate. Instead, USDA slashed 150 million bu. from the month-ago estimate. Total corn use is up 150 million bu. from the January S&D Report with the entire increase in the exports category. USDA now puts 2013-14 corn exports at 1.6 billion bu., up 150 million bu. from the January estimate of 1.450 billion bushels. There were no other changes on the supply or demand side of the balance sheet, so the entire 150-million-bu. increase in total use was taken off the carryover estimate. USDA now puts the national average on-farm cash corn price at $4.20 to $4.80, up a dime on both ends of the range from last month.

Surprisingly, USDA left the soybean carryover estimate unchanged from January at 150 million bushels. That's about 7 million bu. above pre-report trade expectations. On the supply side, USDA increased expected imports by 5 million bu., to 30 million bushels. That increase in supply was completely offset by changes on the demand side with a 15-million-bu. increase in estimated exports (now 1.51 billion bu.) and a 10-million-bu. cut to estimated residual "use" (now 12 million bushels). USDA now puts the national average on-farm cash soybean price at $11.95 to $13.45, up 20 cents on both ends of the range from January.

Traders expected 2013-14 wheat carryover to be down about 5 million bu. from January. Instead, USDA cut carryover 50 million bushels. USDA increased total supplies by 10 million bu. with a 10-million-bu. increase in estimated imports to 170 million bushels. On the demand side, USDA increased estimated food use by 10 million bu. (now 960 million bu.) and increased estimated exports by 50 million bu. (now 1.175 billion bu.) to result in the surprising 50-million-bu. cut to carryover. USDA now puts the national average on-farm cash wheat price at $6.65 to $6.95, up a nickel on the bottom side of the range and down a nickel on the top end of the range from last month.

Cotton carryover was steady with the January estimate. USDA made no changes on the supply or demand side of the balance sheet from last month. USDA now puts the national average on-farm cash cotton price at 74 cents to 78 cents, up 2 cents on the bottom of the range and up a penny on the top end of the range from January.



CORN: 157.3 MMT; down from Jan. proj. of 160.23 MMT
-- 134.0 MMT for 2012-13
BEANS: 73.01 MMT; up from Jan. proj. of 72.33 MMT
-- 58.65 MMT for 2012-13
WHEAT: 183.73 MMT; down from Jan. proj. of 185.4 MMT
-- 175.84 MMT for 2012-13
COTTON: 96.47 mil. bales; down from Jan. proj. of 97.61 mil. bales
-- 89.16 MMT for 2012-13



ARGENTINA BEANS: 54.0 MMT; compares to 54.5 MMT in January
-- 49.3 MMT for 2012-13
BRAZIL BEANS: 90.0 MMT; compares to 89.0 MMT in January
-- 82.0 MMT for 2012-13
ARGENTINA WHEAT: 10.5 MMT; compares to 10.5 MMT in January
-- 9.3 MMT for 2012-13
AUSTRALIA WHEAT: 26.5 MMT; compares to 26.5 MMT in January
-- 22.46 MMT for 2012-13
CHINA WHEAT: 122.0 MMT; compares to 122.0 MMT in January
-- 121.02 MMT for 2012-13
CANADA WHEAT: 37.5 MMT; compares to 37.5 MMT in January
-- 27.21 MMT for 2012-13
EU WHEAT: 142.87 MMT; compares to 142.9 MMT in January
-- 133.88 MMT for 2012-13
RUSSIA WHEAT: 52.07 MMT; compares to 52.1 MMT in January
-- 37.72 MMT for 2012-13
FSU-12 WHEAT: 103.83 MMT; compares to 105.02 MMT in January
-- 77.42 MMT for 2012-13
CHINA CORN: 217.0 MMT; compares to 217.0 MMT in January
-- 205.6 MMT for 2012-13
ARGENTINA CORN: 24.0 MMT; compares to 25.0 MMT in January
-- 26.5 MMT for 2012-13
SOUTH AFRICA CORN: 13.0 MMT; compares to 13.0 MMT in January
-- 12.37 MMT for 2012-13
BRAZIL CORN: 70.0 MMT; compares to 70.0 MMT in January
-- 81.0 MMT for 2012-13
CHINA COTTON: 32.0 mil. bales; compares to 33.0 mil. bales in January
-- 35.0 MMT for 2012-13

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