WASDE Report on December 10, 2009

Published on: 10:28AM Dec 10, 2009

WASDE December 10, 2009

My Take: WASDE Report was a non event. I would say that the soybean carryout was disappointing.

Another gain (2.2mmt) in world wheat stock despite lower production (USDA reduced 09/10 world wheat usage.

A 20 cent bushel increase in the ‘09/10 US on farm soy price to $9.20 despite expectations for a record large 2010 S. American soybean crop.

Exports on today's export sales report: More impressive than the trade was looking for.

My Early grain call: Soybeans 5 cents higher, corn mixed, and wheat mixed.

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OILSEEDS:  Total U.S. oilseed production for 2009/10 is projected at 97.9 million tons, up fractionally due to a small increase in cottonseed.  Soybean exports are increased 15 million bushels to 1.34 billion reflecting the record export pace in recent weeks and higher projected soybean imports by China.  U.S. export commitments (shipments plus outstanding sales) were record high through November, up almost 60 percent from a year ago.  With projected crush unchanged, soybean ending stocks for 2009/10 are projected at 255 million bushels, down 15 million from last month.  

Soybeans and product price projections are all higher this month.  The U.S. season-average soybean price range for 2009/10 is projected at $8.75 to $10.25 compared with $8.20 to $10.20 last month.  The soybean meal price is projected at $260 to $310 per short ton, up $10 on the bottom of the range.  Soybean oil prices are projected at 35.5 to 38.5 cents per pound compared with 33 to 37 cents last month.

Global oilseed production for 2009/10 is projected at 428.6 million tons, down 0.3 million from last month.  Foreign oilseed production accounts for most of the change with increases for soybeans, rapeseed, and cottonseed more than offset by reductions for sunflower seed and peanuts.  Global rapeseed production is projected at a record 59.4 million tons, up 1.3 million from last month with gains for Canada more than offsetting lower production for India.  Canadian rapeseed production is raised 1.6 million tons to 11.8 million based on the latest survey results from Statistics Canada. 

Higher-than-expected yields account for the change.  India rapeseed production is lowered due to reduced harvested area.  Hot, dry conditions during much of the planting season prevented area from reaching earlier expectations.  Global sunflower seed production is projected at 30.7 million tons, down 1 million from last month.  Lower production in Argentina and Russia account for most of the change.  Other changes include reduced peanut production for China and India, and increased cottonseed production for Pakistan.

Global oilseed trade is projected at 94.4 million tons, up 0.7 million from last month.  Increased rapeseed exports from Canada and Australia and increased soybean exports from the United States account for most of the change.  China soybean imports are raised 0.5 million tons to 41 million, just below the record 41.1 million imported in 2008/09.

WHEAT:  U.S. wheat ending stocks for 2009/10 are projected 15 million bushels higher this month reflecting lower expected food use.  Food use is projected 15 million bushels lower based on the latest mill-grind data from the U.S. Census Bureau and indications of 2009-crop quality that suggest higher-than-normal flour extraction rates again in 2009/10. 

Higher flour extraction rates reduce the quantity of wheat needed for milling.  Food use for 2008/09 is estimated 1 million bushels higher based on the latest revisions to mill-grind data.  The marketing-year average farm price projection is unchanged at $4.65 to $5.05 per bushel.

 Global wheat supplies for 2009/10 are projected 1.0 million tons higher as increased production in Canada and EU-27 more than offset lower beginning stocks and production for Australia.  Global wheat production is projected 2.0 million tons higher.  Production is raised 2.5 million tons for Canada

based on the latest estimates from Statistics Canada which sharply raised yields in the Prairie Provinces.  Production is revised 0.3 million tons higher for EU-27 based on an upward yield revision for Italy.  FSU-12 production is also raised slightly with a 0.2-million-ton increase in production for Belarus.  Partly offsetting is a 1.0-million-ton reduction for Australia production based on a downward revision to the

latest government forecast.  Australia production is also lowered for 2007/08 and 2008/09 in line with recently revised government estimates.  These changes lower 2009/10 Australia beginning stocks 0.8 million tons.

Global wheat trade for 2009/10 is projected slightly lower this month, mostly reflecting lower imports by Iran and lower exports by Australia and China.  Imports for Iran are lowered 1.0 million tons based on the slower pace of reported shipments as compared with last year at this time.  Exports are lowered 0.5 million tons for Australia, reflecting tighter exportable supplies.  Exports are lowered 0.5 million tons for

China based on the slow pace of shipments to date and relatively high internal wheat prices.  Exports are also lowered 0.2 million tons for India based on smaller-than-expected recent shipments.  Partly offsetting is a 0.5-million-ton increase in exports for Canada with larger available supplies.  Global consumption is lowered this month mostly reflecting a 1-million-ton reduction in expected EU-27 feeding and reductions of 0.8 million tons and 0.4 million tons, respectively, in food use in India and the United States.  With higher production and lower use, global ending stocks are raised 2.6 million tons.

COARSE GRAINS:  U.S. feed grain ending stocks for 2009/10 are projected higher this month with a reduction in expected corn exports.  Corn exports are lowered 50 million bushels based on the slow pace of shipments to date and increased competition from larger supplies in Ukraine. 

Projected U.S. corn ending stocks are raised 50 million bushels.  At the projected 1,675 million bushels, ending stocks would be nearly unchanged from 2008/09.  The 2009/10 marketing-year average farm price projection for corn is unchanged at $3.25 to $3.85 per bushel. Global coarse grain supplies for 2009/10 are projected 3.0 million tons lower mostly as a result of reduced India millet production.  Global coarse grain beginning stocks are lowered based on multiple year revisions that raise estimated

corn feeding in Iran and barley consumption in Kazakhstan. World corn production is raised mostly reflecting a 0.5-million-ton increase for Ukraine.  World barley production is raised 1.0 million tons with increases for Australia, Canada, and Belarus.  World oat production is lowered slightly with small

reductions for Canada and Australia more than offsetting an increase for Belarus.  Production changes for Australia, Belarus, and Canada reflect the latest government estimates from these countries.  India millet production is lowered 4.0 million tons as area expansion on unplanted rice land was less than expected and the erratic monsoon season lowered yields.  Lower production reduces India millet consumption, but has little impact on global coarse grain trade.

Global coarse grain trade for 2009/10 is nearly unchanged this month as higher Ukraine corn exports offset lower U.S. corn exports and higher Australia barley exports offset lower EU-27 barley exports.  World coarse grain consumption is lowered mostly as a result of reduced India millet use. 

Sorghum consumption is also lowered reflecting a small reduction in food, seed, and industrial use for China and a small reduction in feed use for EU-27.  World barley consumption is raised with increased feed use for Canada and Australia and increased food, seed, and industrial use for Kazakhstan, Morocco, and Australia.  Mixed grain feeding is also raised for EU-27.  Global coarse grain ending stocks are

down 0.8 million tons with reductions in projected stocks of mixed grains, millet, rye, barley, and oats more than offsetting an increase in sorghum.  World corn stocks are nearly unchanged.

RICE:  No changes are made on the U.S. 2009/10 rice supply side; however, on the use side exports are raised slightly and ending stocks lowered by the same amount.  Domestic and residual use is unchanged from last month.  The export projection is raised 1.0 million cwt to 97.0 million with rough rice exports raised 2.0 million, and combined brown and milled exports (rough-equivalent basis) lowered 1.0 million. 

The combined medium- and short-grain export projection is raised 1.0 million cwt to 29.0 million, while the long-grain export projection at 68.0 million is unchanged from last month.  The changes in the export projections are based on analysis of export data through September from the U.S.

Census Bureau along with U.S. Export Sales report data through the end of November.  The pace of combined medium- and short-grain exports for both milled and rough rice are ahead of last year, while long-grain exports in both categories are lagging a year ago.  Ending stocks are projected at 43.2 million cwt, 1.0 million below last month, with the reduction all in combined medium- and short-grain.

The all rice season-average farm price for 2009/10 is forecast at $13.90 to $14.90 per cwt, up 5 cents per cwt on both ends of the range.  The long-grain season-average farm price range is projected at $12.60 to $13.60 per cwt, up 10 cents per cwt on each end of the range.  The combined medium-and short-grain farm price range is projected at $17.75 to $18.75 per cwt, down 25 cents per cwt on each end.  U.S.

long-grain prices have been supported largely on an increase in import demand led by increased import activity by the Philippines, while medium-grain prices have softened since the beginning of the marketing year.

World 2009/10 rice supply and use projections are raised from a month ago.  Global rice production is projected at 433.9 million tons, up 1.8 million from a month ago largely on increases for China, Thailand, Vietnam, and South Korea offset some by reductions for Brazil, North Korea, and the Philippines.  Global exports are increased 0.8 million tons largely on expected increases for India and China.  The increase for India is based on larger expected exports of basmati rice to markets in the Middle East.  The increase for China is based largely on an increase in available exportable supplies due to an increase in production.  Global ending stocks for 2009/10 are projected at 89.5 million tons, up 3.5 million from last month, but 2.1 million below 2008/09.  The increase in stocks is mostly due to larger stocks projected for Thailand, India, and Vietnam.

SUGAR:  Projected 2009/10 sugar supply and use are unchanged from last month.  Compared with a year earlier, supply is projected at 11.6 million short tons, raw value, down 5.2 percent.  Total use is projected at 10.6 million tons, down 1.9 percent.  Ending stocks, at 1 million tons, are down 435,000 tons.

LIVESTOCK, POULTRY, AND DAIRY:  Total U.S. meat production for 2009 is forecast slightly lower as fourth-quarter broiler production is reduced, more than offsetting small increases to the beef production forecast.  Egg production is forecast slightly higher.

Meat production for 2010 is lowered from last month as forecasts for beef, pork, and poultry meat production are reduced.  Cattle slaughter is unchanged but carcass weights in the first quarter are forecast lower.  Hog slaughter is reduced on lower expected hog imports from Canada. 

Growth in broiler and turkey production is slower as hatchery data show few signs of expansion.

Red meat export forecasts for 2009 and 2010 are raised.  Beef exports are forecast higher on expected economic recovery in a number of markets.  Pork exports for 2009 are increased because third-quarter shipments were stronger than expected, and higher 2010 pork exports reflect improved economic prospects in several markets.  The poultry export forecast for 2009 is adjusted to reflect higher third-quarter shipments. 

Cattle price forecasts are reduced for 2009 and 2010 as relatively weak demand for beef is expected to pressure prices.  The hog price forecasts are raised for fourth-quarter 2009 and first-quarter 2010.  The broiler price is lowered for 2009; turkey price forecasts are raised for 2009 and 2010.  The egg price forecast is increased for 2009 and 2010 as demand for eggs has strengthened in the fourth quarter.

COTTON:  This month's U.S. 2009/10 cotton forecasts include a slight increase in production, higher exports, and lower ending stocks.  Production is raised 96,000 bales from last month as reductions for the Mississippi Delta states are more than offset by increases in the other three regions. 

Domestic mill use is unchanged.  Exports are raised 500,000 bales due to higher expected foreign import demand.  Ending stocks are forecast at 4.5 million, 400,000 bales below last month and 31 percent of total use.  The average price received by producers is forecast at 56 to 64 cents per pound, 4 cents higher on each end of the range.

The world cotton 2009/10 forecasts include lower beginning stocks and higher consumption relative to last month, resulting in a 3.6-percent reduction in ending stocks.  Beginning stocks are lowered mainly in India and Uzbekistan due to adjustments in the prior-year balance sheets. 

Production is lowered in India and Peru, but is raised in Pakistan and the United States.  World consumption is raised 1.0 million bales from last month, including increases for China, India, Vietnam, Uzbekistan, and Thailand.  World trade also is raised due to increased demand by several importing countries, which is partially offset by a reduction for Pakistan.  The China import forecast is increased 500,000 bales to 9.0 million as the government has recently announced larger-than-expected import quotas, thereby removing a key constraint on imports and consumption. 

Exports are raised in the United States, Brazil, India, Pakistan, and Greece, but are lowered in Uzbekistan.  World ending stocks are now forecast at 51.8 million bales.


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