Tighter Stocks of Major Crops Seen by USDA- Market Sees Higher Prices Needed to Ration DemandWed, 12 Jan 2011 8:23:33 CST
The latest USDA Crop and Supply Demand Reports have been released by the agency. The Wednesday morning reports on Supply Demand data shows shrinking stocks of corn, wheat and soybeans based on the latest data. Stocks of cotton in the January report were left unchanged compared to December.
The immediate reaction to the Supply Demand data is for a higher open for the major crops with tighter balance sheets. Click here for the full report on Supply Demand numbers as released by USDA Wedneday morning, January 12.
Click on the LISTEN BAR below for Ed Richards and his conversation with Tom Leffler about primarily the Supply Demand data as detailed in the report above.
Here's a Summary from the Supply Demand Report of the Major Crops:
WHEAT: U.S. wheat ending stocks for 2010/11 are projected 40 million bushels lower this month as a reduction in expected feed and residual use is more than offset by higher projected exports. Feed and residual use is projected 10 million bushels lower as December 1 stocks, reported in the January Grain Stocks, indicate lower-than-expected disappearance during September-November. Exports are projected 50 million bushels higher reflecting the pace of sales and shipments to date and reduced competition with lower foreign supplies of milling quality wheat. At the projected 1.3 billion bushels, exports would be the highest since 1992/93. Most of the increase is expected in Hard Red Winter and Soft Red Winter wheats, but exports are also raised slightly for Hard Red Spring and white wheats. The marketing-year average price received by producers is projected at $5.50 to $5.80 per bushel, up from $5.30 to $5.70 per bushel last month.
COARSE GRAINS: U.S. feed grain supplies for 2010/11 are projected down reflecting lower corn production. U.S. corn production is estimated 93 million bushels lower as a 1.5-bushel-per-acre
reduction in the national average yield outweighs a 183,000-acre increase in harvested area. A 5-million-bushel increase in projected U.S. corn imports slightly offsets the reduction in output.
Corn feed and residual use is projected 100 million bushels lower based on September-November disappearance as indicated by the December 1 stocks. Corn used for ethanol is raised 100 million bushels offsetting the reduction in expected feed and residual use. Record December ethanol production, as indicated by weekly Energy Information Administration data, boosts corn use to date.
Ending corn stocks for 2010/11 are projected 87 million bushels lower at 745 million. This is down 963 million bushels from last year. The stocks-to-use ratio is projected at 5.5 percent, the lowest since 1995/96 when it dropped to 5.0 percent. The 2010/11 marketing-year average farm price projection is raised 10 cents on both ends of the range to $4.90 to $5.70 per bushel as cash and futures prices are expected to strengthen. Heavy early season marketings of corn priced well below current cash price levels are expected to limit the upside potential for the weighted average price received by producers.
OILSEEDS: U.S. oilseed production for 2010/11 is estimated at 100.5 million tons, down 1.2 million from last month. Lower crops for soybeans, sunflowerseed, and canola are only partly offset by increases for peanuts and cottonseed. Soybean production is estimated at 3.329 billion bushels, down 46 million bushels based on reduced harvested area and lower yields. The soybean yield is estimated at 43.5 bushels per acre, down from last year's record of 44 bushels per acre. Soybean crush is lowered 10 million bushels to 1.655 billion bushels. However, higher projected extraction rates for soybean meal and oil leaves production of both products nearly unchanged. Soybean exports are projected at a record 1.590 billion bushels, unchanged from last month. Soybean ending stocks are projected at 140 million bushels, down 25 million from last month.
The 2010/11 U.S. season-average soybean price range is projected at $11.20 to $12.20, up 50 cents on the lower end of the range. However, early season marketings priced below current cash price levels are expected to limit the upside potential for the weighted average price received by producers. The soybean oil price is forecast at 48 to 52 cents per pound, up 3 cents on both ends of the range. The soybean meal price is projected at $320 to $360 per short ton, up 10 dollars on both ends of the range.
Cotton: The U.S. cotton 2010/11 supply and demand estimates show minor revisions from last month. Production is raised 47,000 bales, due mainly to increases for California and Georgia. Domestic mill use is raised 50,000 bales to 3.6 million, reflecting stronger-than-expected activity in recent months. Exports and ending stocks are unchanged. The forecast range of 78 to 86 cents per pound for the average price received by producers is raised 2 cents on the lower end, as monthly prices reported by NASS continue to rise.
This month's world cotton 2010/11 estimates include lower beginning stocks and production and higher consumption, resulting in a 560,000-bale reduction in ending stocks. Global production is reduced marginally as increases for Brazil and Turkmenistan are more than offset by reductions for Syria and others. World consumption is raised slightly, reflecting an increase for India and reductions for Pakistan and Syria. World trade is reduced marginally.
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