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May 10 USDA Reports

Written by: Kent Thiesse

The USDA Crop Production and World Agricultural Supply and Demand Estimates (WADSE) Reports released on May 10 were regarded as “bearish” for the corn market and “bullish” for the soybean market in the coming months. Corn stocks are expected to double by the end of the 2012-13 crop marketing year, while the ending soybean stocks are expected to be at the tightest level on record by the end of the 2012-13 marketing year, which runs from September 1, 2012 to August 31, 2013. Following are some highlights of the latest USDA latest USDA WADSE and Crop Reports :

 

CORN :

According to the May 10 USDA WADSE Report, the projected corn ending stocks for 2011-2012 are now estimated at 851 million bushels, which was increased by 50 million bushels compared to the April WADSE Report. This was based on an expected reduction in utilization of corn in the U.S. for feed and residual usage. The 2011-12 ending stocks level is still below the 2010-11 ending stocks of 1.13 billion bushels, and about half of the corn carryover level of over 1.7 billion bushels for 2009-2010. USDA is projecting that total U.S. corn use for 2011-2012 will be approximately 12.65 billion bushels of corn for livestock feed, ethanol, food products, seed, exports, etc., which is down from slightly over 13 billion bushels in both 2010-11 and 2009-10.

 

Based on the most recent WADSE Report, USDA is projecting the corn ending stocks to more than double by the end of the 2012-13 marketing year, compared to 2011-12 levels, increasing to 1.88 billion bushels. This would be the highest level of ending stocks since the 2005-06 carryover level of 1.97 billion bushels. The important ending stocks-to-use ratio for corn is projected to increase from the current level of 6.7 % to a level of 13.7 % for 2012-13. USDA is projecting total corn usage to increase to 13.77 billion bushels for 2012-13; however, they are also estimating total U.S. corn production for 2012 to increase by 2.43 billion bushels compared to 2011 corn production.

 

According to the May 10 USDA Report, the total U.S, corn production for 2012 is estimated at 14.79 billion bushels, which far surpasses the 2011 total corn production of 12.35 billion bushels and the record U.S. corn production of 13.1 billion bushels in 2009. The Report indicated an estimated 95.9 million acres planted to corn in 2012, which is up 4 percent from the 91.9 million planted acres in 2011, and up 9 percent from 88.2 million acres in 2010. If achieved, the 2012 planted corn acres would be the highest since 1937, when 97.2 million acres were planted.

 

USDA is projecting a record national average corn yield of 166 bushels per acre for 2012, surpassing the previous record corn yield of 164.7 bushels per acre in 2009. This compares to national average corn yields of 147.2 bushels per acre in 2011 and 152.8 bushels per acre in 2010. USDA cites early corn planting in much of the U.S., along with favorable weather in the early growing season, as supporting the 2012 corn yield estimates.

 

USDA is estimating the average U.S “on-farm” corn price for the 2012-13 marketing year in a range of $4.20-$5.00 per bushel, or an average price of $4.60 per bushel, which is a significant decrease from the 2011-12 average “on-farm” price of $6.10 per bushel. This compares to an estimated average farm price of $5.18 per bushel for 2010-11 and $3.55 per bushel for 2009-10. 

 

 

SOYBEANS :

According to the May 10 USDA WADSE Report, the projected soybean ending stocks for 2011-12 will be 210 million bushels, which was reduced from the April soybean carryover estimate of 250 million bushels. The estimated reduction in ending stocks was due to a higher than expected domestic soybean crush level and increased soybean export demand. The 2011-12 soybean ending stock levels compare to carryover levels of 215 million bushels in 2010-2011 and 151 million bushels for 2009-2010. The current soybean “stocks-to-use” ratio is now estimated at 6.8 percent, which is fairly tight.

 

Based on the recent WADSE Report, soybean ending stocks for 2012-13 are expected to shrink to 145 million bushels, which would drop the stocks-to-use ratio to the lowest level ever at 4.4 percent. This estimate is based on an increased soybean crush and higher soybean exports in 2012-13, compared to a year earlier, with fairly stable levels of soybean production. Total U.S. soybean production in 2012 is expected to be just above 3.20 billion bushels, which compares to 3.06 billion bushels in 2011 and 3.33 billion bushels in 2010. Planted soybean acres for 2012 are estimated at 73.9 million acres, compared to 75.0 million acres in both 2011 and 2010. USDA is estimating a national average soybean yield of 43.9 bushels per acre in 2012, which compares to 41.5 bushels per acre in 2011, 43.5 bushels per acre in 2010, and the U.S. record soybean yield of 44.0 bushels per acre in 2009.

 

USDA is now estimating the U.S “on-farm” soybean price for the 2012-13 marketing year in a range from $12.00-$14.00 per bushel, or an average price of $13.00 per bushel, which compares to an estimated average farm price of $12.35 per bushel for 2011-12, $11.30 per bushel for 2010-11, and $9.59 per bushel for 2009-10. 

 

MARKETING STRATEGIES :

The latest USDA WADSE and Crop Production Reports send kind of a mixed message regarding grain marketing strategies. The relatively tight 2011-12 corn supplies should keep the market for “old crop” corn relatively strong, with fairly tight local basis levels, and some good cash marketing opportunities in the next few months. The projected large 2012 corn crop, and the associated significant increase in corn carryover levels for the 2012-13 marketing year, is likely to put continued pressure on “new crop” corn prices, This could limit substantial price increases during the coming growing season, similar to those seen in recent years when much tighter projected corn ending stocks existed. Farm operators will want to watch for some “new crop” corn pricing opportunities in the coming months during short-term market rallies. Price prospects for “new crop” soybeans should remain quite positive in the coming months, given the very tight projected carryover levels for the 2012-13 marketing year, with some very strong market rallies likely, if 2012 soybean production levels are threatened.