Comments on the USDA Supply & Demand Report

Author:  Comments Off on Comments on the USDA Supply & Demand Report

Corn

In today’s report, a few adjustments were made to the old crop numbers more or less squaring them up as ending stocks were left at 988 million bushels. For the current marketing year of 2012/13, planted and harvested acreage were unchanged as adjustments there will be made in the January 11, 2013 report. There is some speculation that harvested acreage will be reduced to reflect corn that went to silage. Yields were bumped up 0.30 bushels per acre to 122.3 bushels per acre for total production of 10.725 billion bushels. The trade was expecting yields of 122.1 bushels per acre and production of 10.629 billion bushels as some analysts expected harvested acreage to be reduced. Imports were increased 25 million bushels reflecting expectations for more shipments coming into the southeastern feed market. Normally, the eastern Corn Belt supplies that market, however, they are currently priced 10% higher than corn from Argentina. There could also be some availably issues as supplies have been reduced from the drought. Overall corn supply was increased 45 million bushels. Domestic use was increased 17 million bushels with higher projected use for sweeteners and starch. The 2012/13 ending stocks were projected at 647 million bushels, up 28 million bushels from last month and 12 million bushels higher than the average pre-report guess. The season average price as compared to last month is down 15 cents on the lower end and down 25 cents on the top side in a range from $6.95 to $8.25 a bushel. The stocks to use ratio is projected at 5.8% compared to last month’s 5.6%.  Global stocks are projected at 4.645 billion bushels, 28 million bushels higher than last month. The global stocks to use ratio is 13.8%, up 0.1% from last month. December corn in late morning trading was unchanged at $7.41 a bushel. In weekly comments, I am 50% priced of anticipated production with another 30% priced in Put options and the remainder sold at harvest. I would not store un-priced or without a floor price in place through buying a Put option.  A March $7.50 Put costs 33 cents and would set a $7.17 futures floor. September 2013 corn traded at $6.53, down 2 cents. I am currently priced 10% for 2013 production and will look for additional opportunities to price more. Over the past 31 years the average difference between the November projection for U.S. ending stocks and the final estimate has been 314 million bushels with 17 years below the final estimate and 14 years above.  The next USDA Supply & Demand report will be released December 11, 2012.

Supply

2004/
2005
2005/
2006
2006/
2007
2007/
2008
2008/2009

 

2009/2010

 

2010/2011

 

2011/2012

USDA

Estimated

2012/2013

USDA

Projected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

80.9

81.8

78.3

93.5

86.0

86.4

88.2

91.9

96.9

Acres Harvested

73.6

75.1

70.6

86.5

78.6

79.5

81.4

84.0

87.7

U.S. Average Yield

160.4

147.9

149.1

150.7

153.9

164.7

152.8

147.2

122.3

Beg. Stocks
(million bushels)

958

2114

1967

1304

1624

1673

1708

1128

988

Production

11807

11114

10531

13038

12092

13092

12447

12358

10725

Imports

11

9

12

20

14

8

28

29

100

Total Supply

12776

13237

12510

14362

13729

14774

14182

13515

11814

Use

         

 

 

 

 

Feed and Residual

6162

6141

5591

5913

5182

5125

4792

4547

4150

Ethanol

1323

1603

2119

3049

3709

4591

5021

5011

4500

Food, seed & industrial

1363

1378

1371

1338

1316

1370

1407

1426

1367

Exports

1814

2147

2125

2437

1849

1980

1835

1543

1150

Total Use

10662

11270

11207

12737

12056

13066

13054

12527

11167

U.S. Ending Stocks

2114

1967

1304

1624

1673

1708

1128

988

647

Foreign Stocks

3092

2943

2983

3583

4137

4012

3872

4211

3998

U.S. Avg. Season Price

$2.06

$2.00

$3.04

$4.20

$4.06

$3.55

$5.18

$6.22

$7.60

Stocks/Use

19.8%

17.5%

11.6%

12.8%

13.9%

13.1%

8.6%

7.9%

5.8%

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA raised the current crop ending stocks from last month to 5.80 million bales on a 160,000 bale increase in production with a 38.7% stocks to use ratio. The trade was expecting a slight decrease to 5.50 million bales. The projected price for the 2012/13 marketing year is expected to range from 64 to 72 cents per pound, an increase of 2 cents on the bottom side and a 2 cent decrease on the top end. U.S. production of 17.45 million bales was increased on a 7 pound per acre increase in yields from October with the estimate at 802 pounds per acre. Tennessee yields were raised 64 pounds per acre to 896 pounds. Domestic usage and exports were unchanged. Global stocks are projected to increase 1.16 million bales to 80.27 million bales. China’s ending stocks of 37.11 million bales account for 46% of the world’s record stocks and represent a stock to use ratio of 104%. Globally, the stocks to use ratio is 75.5%. Keep in contact with your cotton buyer on current quotes.  March cotton at mid-day was 70.09 cents/pound, down 0.25 cents today.  I would be 25% – 50% priced on cotton. Cotton has been trading in the low range of its sideways pattern. Look for any rallies as opportunities to add to pricing.

Over the past 31 years the average difference between the October projection for U.S. ending stocks and the final estimate has been 1.1 million bales with 11 years below the final estimate and 20 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released December 11, 2012.

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010

 

2010/2011

 

2011/2012

USDA

Estimated

2012/2013

USDA

Projected

 

 

 

 

 

 

 

 

 

 

 Acres Planted
(million acres)

13.7

14.2

15.27

10.83

9.47

9.15

10.97

14.74

12.36

Acres Harvested

13.1

13.8

12.73

10.49

7.57

7.53

10.70

9.46

10.44

U.S. Average Yield
(lbs/acre)

855

831

814

879

813

777

812

790

802

Beg. Stocks
(million bales)

3.45

5.50

6.07

9.48

10.05

6.34

2.95

2.60

3.35

Production

23.25

23.89

21.59

19.21

12.82

12.19

18.10

15.57

17.45

Imports

0.03

0.03

0.02

0.01

0.00

0.00

0.01

0.02

0.01

Total Supply

26.73

29.41

27.66

28.7

22.87

18.53

21.06

18.19

20.80

Use

         

 

 

 

 

Domestic

6.69

5.89

4.94

4.59

3.59

3.46

3.90

3.30

3.40

Exports

14.41

18.04

13.01

13.65

13.26

12.04

14.38

11.71

11.60

Total Use

21.10

23.92

17.95

18.24

16.85

15.50

18.28

15.01

15.00

U.S. Ending Stocks

5.50

6.05

9.48

10.05

6.34

2.95

2.60

3.35

5.80

Foreign Stocks

51.8

56.4

53.34

50.68

54.47

43.86

46.10

66.28

74.47

U.S. Avg. Season Price

$0.416

$0.477

$0.465

$0.593

$0.478

$0.629

$0.815

$0.883

$0.68

Stocks/Use

26.1%

25.3%

52.8%

55.0%

37.6%

19.0%

14.2%

22.3%

38.7%

 

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

USDA’s report for soybeans as well as all crops has been considered bearish and today’s trade through mid-day reflects that bearish sentiment. Today’s number are not that out of range of what analysts were expecting so the market could be more reflecting the strength in the dollar. For the 2012/13 crop year, planted and harvested acreage was unchanged and will most likely be adjusted in January. Yields increased 1.5 bushels per acre from last month to 39.3 bushels per acre reflecting yield increases from late season rains. This compared to the average trade guess of 38.2 bushels per acre. Overall soybean supply was up 110 million bushels from last month based on the increase in yield and is estimated at 3.160 billion bushels. As was somewhat expected demand was increased 101 million bushels (rounded) as crush increased 20 million bushels from the October report while exports were raised 80 million bushels. Ending stocks are projected at 140 million bushels, up 10 million bushels from last month and 7 million bushels higher than expected. The season average price was lowered 35 cents on both ends from last month and is projected to range from $13.90 to $15.90 a bushel. The stocks to use ratio ticked up 0.1% to 4.6%.  Global new crop stocks are projected to increase 90.4 million bushels to 2.205 billion bushels with a stock to use ratio of 23%. The projected record South American crop is unchanged from last month. Weather conditions are some better than a month ago and will continue to be a market driver for the next few months.  The market has responded negatively to this report as January soybeans traded mid-day at $14.64 1/2, down 31 ¼ cents per bushel. I am currently priced at 50% for the 2012 crop with another 30% priced in Put options with the remainder priced at harvest. There does not appear to be any advantage to storing other than price speculation. That may be better served by selling soybeans and buying an out of the money March or May call option. A $15.20 March Call would cost 36 cents. If using storage, I would not store un-priced or at least have a floor price set. A March $14.60 Put would cost 67 cents and set a $13.93 futures floor.  This option expires February 22, 2013. November 2013 soybeans traded mid-day at $13.21 ½ a bushel, down 16¼ cents today. Watch for 2013 opportunities for pricing. I would be inclined to start pricing if November 2013 soybeans close at the 50 day moving average of $13.44 or drop back to the 100 day moving average of $13.17. Over the past 31 years the average difference between the November projection for U.S. ending stocks and the final estimate has been 73 million bushels with 8 years below the final estimate and 23 years above. The next USDA Supply & Demand report will be released December 11, 2012.

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010

 

2010/2011

 

2011/2012

USDA

Estimated

2012/2013

USDA

Projected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

75.2

72.0

75.5

64.7

75.7

77.5

77.4

75.0

77.2

Acres Harvested

74.0

71.3

74.6

64.1

74.7

76.4

76.6

73.8

75.7

U.S. Average Yield

42.2

43.0

42.9

41.7

39.7

44.0

43.5

41.9

39.3

Beg. Stocks
(million bushels)

112

256

449

574

205

138

151

215

169

Production

3124

3063

3197

2677

2967

3359

3329

3094

2971

Imports

5

4

9

10

13

15

14

16

20

Total Supply

3241

3323

3655

3261

3185

3512

3495

3325

3160

Use

         

 

 

 

 

Crushing

1696

1739

1808

1801

1662

1752

1648

1703

1520

Exports

1103

948

1116

1161

1279

1499

1501

1362

1345

Seed and Residual

186

188

156

93

106

110

130

91

115

Total Use

2985

2874

3081

3056

3047

3361

3280

3155

3021

U.S. Ending Stocks

256

449

574

205

138

151

215

169

140

Foreign Stocks

1486

1509

1727

1684

1440

2096

2373

1888

2066

U.S. Average Season Price

$5.74

$5.66

$6.43

$10.10

$9.97

$9.59

$11.30

$12.50

$14.90

Stocks/Use

8.6%

15.6%

18.6%

6.7%

4.5%

4.5%

6.6%

5.4%

4.6%

Supply and Demand Projections and Historical Data Source: USDA

Wheat

 

USDA offered a somewhat bearish wheat supply and demand report that may have to be tempered with weather conditions in the Plains states. USDA 2012/13 projections estimate ending stocks at 704 million bushels compared to the average pre-report guess of 666 million bushels and last month’s projection of 654 million bushels. The only change was made on the demand side where exports were lowered 50 million bushels reflecting the slow pace of sales and shipments. That could change as some major wheat exporter get low on supplies. The stock to use ratio was raised 2.6% to 28.9%. The projected season average price of $7.75 to $8.45 a bushel was raised 10 cents on the bottom side and lowered 10 cents on the top end. Global stocks are expected to increase 43.4 million bushels from last month’s projection to 6.400 billion bushels on lower production but also lower consumption mainly from wheat feeding. December wheat traded mid-day down 14 ¼ cents at $8.88 ¼. July 2013 wheat has also traded down 7 ¾ cents to $8.87 ¾. It did trade as high as $9.00.  In my weekly comments, I am currently priced 10% on the 2013 crop and would put serious consideration to pricing more as the wheat crop develops. Over the past 31 years the average difference between the November projection for U.S. ending stocks and the final estimate has been 73 million bushels with 17 years below the final estimate and 14 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released December 11, 2012. 

 

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010

 

2010/2011

 

2011/2012

USDA

Estimated

2012/2013

USDA

Projected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

59.7

57.2

57.3

60.5

63.2

59.2

53.6

54.4

55.7

Acres Harvested

50.0

50.1

46.8

51.0

55.7

49.9

47.6

45.7

49

U.S. Average Yield

43.2

42.0

38.6

40.2

44.9

44.5

46.3

43.7

46.3

Beg. Stocks
(million bushels)

546

540

571

456

306

657

976

862

743

Production

2158

2105

1808

2051

2499

2218

2207

1999

2269

Imports

71

82

122

113

127

119

97

112

130

Total Supply

2775

2727

2501

2620

2932

2993

3279

2974

3142

Use

         

 

 

 

 

Food

907

915

938

947

927

919

926

941

950

Seed

79

78

82

88

78

69

71

76

73

Feed

187

153

117

15

255

150

132

164

315

Exports

1063

1009

908

1264

1015

879

1289

1050

1100

Total Use

2235

2155

2045

2314

2275

2018

2417

2231

2438

U.S. Ending Stocks

540

571

456

306

657

976

862

743

704

Foreign Stocks

4993

4837

4205

4322

5482

6401

6411

6529

5696

U.S. Avg. Season Price

$3.40

$3.42

$4.26

$6.48

$6.78

$4.87

$5.70

$7.24

$8.10

Stocks/Use

24.2%

26.5%

22.3%

13.2%

28.9%

48.4%

35.7%

33.3%

28.9%

 

Supply and Demand Projections and Historical Data Source: USDA

 

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