WASDE: Corn Supplies Decrease on Lower Production
Jul 09, 2010
The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report today. This morning’s report was slightly bearish as the USDA numbers mostly came in above the average estimates.
Grain prices have been on a rally of late after last week’s surprising Acreage Report, concerns over 2010 production estimates, and increased foreign demand.
U.S. corn ending stocks for 2010/11 were decreased by 200 million bushels to 1.373 billion bushels from the June estimate, but higher than the average estimate of 1.269 billion bushels. The decrease in ending stocks was due to an increase in usage from 2009/10, decreased harvest area, and a 125 million bushel decrease in production. Corn stocks-to-use ratio for 2010/11 is now estimated at 10.3%, the lowest level since 2003/04.
“The reduction in the corn carryover has drastically changed the supply dynamics,” said Roy Huckabay of the Linn Group. “Too much rain in the Midwest and hot, dry weather in the southern and eastern U.S. are causing crops to walk backwards.”
2010/11 estimated corn exports were decreased by 50 million bushels as tighter domestic supplies, higher ethanol production, and rising prices will reduce the export competitiveness of the U.S. corn crop. Corn use for ethanol is lowered 50 million bushels reflecting the latest ethanol production data from the Energy Information Administration (EIA). The USDA season-average farm price for corn is estimated at $3.45 to $4.05 per bushel, up 15 cents from the June estimate.
Projected world corn supplies were decreased by 14.9 million tons in which over half of the decrease can be attributed to lower U.S. carryin and production.
Estimated ending stocks of soybeans remained unchanged by the USDA this month as increased exports and crush offset the increase in U.S. production. U.S. production increased by 35 million bushels on an increase in area harvested. The record yield estimate of 42.9 bushels per acre for 2010/11 was left unchanged despite planting delays and excessive precipitation.
“Demand continues to improve,” said Bill Nelson economist at Doane Advisory Services Co. “Soybeans supplies left from last year’s crop will be tight before this year’s harvest.”
U.S. exports were projected at a record 1.46 billion bushels on recent purchases from the Chinese. The USDA season-average farm price for soybeans is estimated at $8.10 to $9.60, up 10 cents from last month.
Estimated global soybean production was marked at a record 251.3 million tons, up 1.4 million tons due to increased production in the U.S.
An increase in foreign demand was not enough to offset higher production of wheat. The USDA estimated wheat ending stocks for 2010/11 to increase by 102 million bushels due to increased area, yields, and carryin. The ending stocks of U.S. wheat remain at 23 year highs.
U.S. wheat yields were increased by 2.0 bushels per acre to a record 45.9 bushels per acre, which directly increased production by 14.9 million bushels. The USDA season-average farm price for wheat is estimated at $4.20 to $5.00, up 20 cents from last month’s WASDE.
World wheat supplies estimates decreased by 7.5 million tons on lower global production despite the increase in U.S. production.
Click on the link for the full WASDE report: http://www.usda.gov/oce/commodity/wasde.
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