Comments on the USDA Supply & Demand Report

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

Corn

In today’s report, old crop corn ending stocks were raised 160 million bushels from last month to 1.181 billion bushels as feed/residual use was slashed 150 million bushels and exports reduced 10 million bushels. The average trade guess for ending stocks was 1.014 billion bushels. The stocks to use ratio rose from 8.2% to 9.6%.  The season average old crop price is estimated at $6.25 a bushel. Global old crop corn stocks increased 143 million bushels from last month to 5.496 billion bushels as higher prices slowed usage. For the new crop year of 2012/13, USDA left planted acreage at 96.4 million acres and estimated harvested acreage at 87.4 million acres. Changes will most likely be made to acreage in the October report. Yields were reduced down 0.60 bushels per acre to 122.8 bushels per acre for total production of 10.727 billion bushels. The trade was expecting yields of 120.6 bushels per acre and production of 10.403 billion bushels. Supply was increased 108 million bushels on higher beginning stocks and a less than expected cut in production. New crop ending stocks were projected at 733 million bushels, up 83 million bushels from August. Usage was raised 25 million bushels as feed and residual use was increased 75 million bushels and exports reduced 50 million bushels. The new crop season average price as compared to last month is down 30 cents on both sides in a range from $7.20 to $8.60 a bushel. The stocks to use ratio is projected at 6.5% compared to last month’s 5.8%.  Global stocks are projected at 4.850 billion bushels, 5 million bushels lower than last month. December corn before the close traded down 10 ¾ cents at $7.67 a bushel. In weekly comments, I am currently 50% priced of anticipated production with another 30% priced in Put options. As corn harvest wraps up Tennessee, I would sell the remainder of un-priced corn at harvest or if storage is available contract for future delivery taking advantage of basis improvement. I would not store corn un-priced or at least without a floor price.   A December $7.70 Put would cost 38 cents and set a $7.32 futures floor. This option expires November 23.  September 2013 corn traded at $6.76 ¾, down 5  cents before the close. 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 September projection for U.S. ending stocks and the final estimate has been 332 million bushels with 14 years below the final estimate and 17 years above.  The next USDA Supply & Demand report will be released October 11, 2012.

Supply

2004/
2005
2005/
2006
2006/
2007
2007/
2008
2008/2009  2009/2010  2010/2011  2011/2012USDA Estimated 2012/2013USDAProjected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

80.9

81.8

78.3

93.5

86.0

86.4

88.2

91.9

96.4

Acres Harvested

73.6

75.1

70.6

86.5

78.6

79.5

81.4

84.0

87.4

U.S. Average Yield

160.4

147.9

149.1

150.7

153.9

164.7

152.8

147.2

122.8

Beg. Stocks
(million bushels)

958

2114

1967

1304

1624

1673

1708

1128

1181

Production

11807

11114

10531

13038

12092

13092

12447

12358

10727

Imports

11

9

12

20

14

8

28

25

75

Total Supply

12776

13237

12510

14362

13729

14774

14182

13511

11983

Use

         

 

 

 

 

Feed and Residual

6162

6141

5591

5913

5182

5125

4792

4400

4150

Ethanol

1323

1603

2119

3049

3709

4591

5021

5000

4500

Food, seed & industrial

1363

1378

1371

1338

1316

1370

1407

1390

1350

Exports

1814

2147

2125

2437

1849

1980

1835

1540

1250

Total Use

10662

11270

11207

12737

12056

13066

13054

12330

11250

U.S. Ending Stocks

2114

1967

1304

1624

1673

1708

1128

1181

733

Foreign Stocks

3092

2943

2983

3583

4137

4031

3894

4315

4146

U.S. Avg. Season Price

$2.06

$2.00

$3.04

$4.20

$4.06

$3.55

$5.18

$6.25

$7.90

Stocks/Use

19.8%

17.5%

11.6%

12.8%

13.9%

13.1%

8.6%

9.6%

6.5%

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA raised old crop ending stocks 50,000 bales from last month on an adjustment in the unaccounted category to 3.35 million bales. The projected price for 2011/12 was lowered to 88.5 cents per pound. The stocks to use ratio is 22.3%. World projections for old crop ending stocks were projected 2.08 million bales higher at 69.88 million bales on mainly adjustments to China, India, and Australia’s balance sheets. New crop U.S. production was reduced 540,000 bales from August on lower estimated production in Mississippi and Texas and slightly higher production in the Southeast. Planted and harvested acres were both reduced reflecting FSA certified acres. The projected yield of 786 pounds per acre was 2 pounds higher than August. Domestic use was left unchanged while exports were reduced 300,000 bales on lower U.S. production and a reduction in total world imports. New crop ending stocks dropped 300,000 bales from August to 5.2 million bales on the increase in production and an adjustment in the unaccounted category. The season average price for new crop is projected to range from 62 to 78 cents per pound, an increase of 1 cent on the lower end and a decrease of 1 cent on the top side. Global stocks are projected to increase 1.85 million bales to 76.52 million bales on higher beginning stocks (adjustments from China, India, and Australia) and lower world consumption. China’s consumption is expected to fall 2.5% from last year due to governmental policies. Keep in contact with your cotton buyer on current quotes.  December cotton traded mid-day at 72.91 cents/pound, down 2.02 cents today. Over the past 31 years the average difference between the September projection for U.S. ending stocks and the final estimate has been 1.4 million bales with 14 years below the final estimate and 17 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 October 11, 2012.

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010  2010/2011  2011/2012USDAEstimated 2012/2013USDAProjected

 

 

 

 

 

 

 

 

 

 

 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

786

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

17.11

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

20.46

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

11.80

Total Use

21.10

23.92

17.95

18.24

16.85

15.50

18.28

15.01

15.20

U.S. Ending Stocks

5.50

6.05

9.48

10.05

6.34

2.95

2.60

3.35

5.30

Foreign Stocks

51.8

56.4

53.34

50.68

54.47

44.87

46.92

66.53

71.22

U.S. Avg. Season Price

$0.416

$0.477

$0.465

$0.593

$0.478

$0.629

$0.815

$0.885

$0.70

Stocks/Use

26.1%

25.3%

52.8%

55.0%

37.6%

19.0%

14.2%

22.3%

34.9%

 

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

In an overall friendly USDA report, ending stocks for 2011/12 (old crop) were lowered 15 million bushels to 130 million bushels compared to trade expectations of 137 million bushels. Imports were raised 1 million bushels while crush was increased 15 million bushels, exports increased 10 million bushels and residual use was cut 10 million bushels. The season average price for 2011/12 was unchanged at $12.45 a bushel. Stocks to use ratio was 4.1%, down from 4.6% last month.  World ending stocks for the just finished 2011/12 marketing year are projected at 1.971 billion bushels, an increase of 63 million bushels from last month. For the new crop year, as expected, acreage was left unchanged from last month. Acreage is usually adjusted in October and could possibly then reflect a higher than average abandonment number due to the drought. Yields were again reduced as USDA lowered soybean yields 0.8 bushels per acre from last month to 35.3 bushels per acre. This compared to the average trade guess of 35.5 bushels per acre. Overall soybean supply was reduced 72 million bushels. Demand for the new crop soybean marketing year was reduced 72 million bushels as crush was lowered 15 million bushels from the August report while exports were lowered 55 million bushels and residual use cut 2 million bushels. Ending stocks are projected at a tight 115 million bushels, unchanged from last month and 9 million bushels higher than expected. USDA appears to be signaling that this 115 million bushel amount is the minimum needed in the soybean pipeline to meet demand. The season average price was unchanged from last month and is projected to range from $15.00 to $17.00 a bushel. The stocks to use ratio ticked up 0.1% to 4.3%.  Global new crop stocks are projected to decrease 10 million bushels to 1.951 billion bushels. The market will remain uncertain until the large projected South American crop can be confirmed later this year and early in 2013.  The market has responded favorably to this report as November soybeans traded late morning at $17.45, up 43 ½ cents per bushel. I am currently priced at 50% for the 2012 crop with another 30% priced in Put options.  At these levels, I would be inclined to sell any un-priced soybeans at harvest. Storage should be used for basis appreciation and not necessarily futures price speculation. From a price risk management standpoint, a $17.50 Put would cost 61 cents and set a $16.89 futures floor.  This option expires October 26, 2012. November 2013 soybeans traded at $13.67 ½ a bushel, up 20 ¾ cents today. Watch for 2013 opportunities for pricing.  Over the past 31 years the average difference between the September projection for U.S. ending stocks and the final estimate has been 77 million bushels with 9 years below the final estimate and 22 years above. The next USDA Supply & Demand report will be released October 11, 2012.

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010  2010/2011  2011/2012USDA Estimated 2012/2013USDAProjected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

75.2

72.0

75.5

64.7

75.7

77.5

77.4

75.0

76.1

Acres Harvested

74.0

71.3

74.6

64.1

74.7

76.4

76.6

73.6

74.6

U.S. Average Yield

42.2

43.0

42.9

41.7

39.7

44.0

43.5

41.5

35.3

Beg. Stocks
(million bushels)

112

256

449

574

205

138

151

215

130

Production

3124

3063

3197

2677

2967

3359

3329

3056

2634

Imports

5

4

9

10

13

15

14

16

20

Total Supply

3241

3323

3655

3261

3185

3512

3495

3286

2785

Use

         

 

 

 

 

Crushing

1696

1739

1808

1801

1662

1752

1648

1705

1500

Exports

1103

948

1116

1161

1279

1499

1501

1360

1055

Seed and Residual

186

188

156

93

106

110

130

91

114

Total Use

2985

2874

3081

3056

3047

3361

3280

3157

2670

U.S. Ending Stocks

256

449

574

205

138

151

215

130

115

Foreign Stocks

1486

1509

1727

1684

1440

2096

2367

1840

1836

U.S. Average Season Price

$5.74

$5.66

$6.43

$10.10

$9.97

$9.59

$11.30

$12.45

$16.00

Stocks/Use

8.6%

15.6%

18.6%

6.7%

4.5%

4.5%

6.6%

4.1%

4.3%

Supply and Demand Projections and Historical Data Source: USDA

Wheat

USDA offered a neutral wheat supply and demand report today with no changes from last month. USDA 2012/13 projections estimate ending stocks at 698 million bushels compared to the average pre-report guess of 709 million bushels. Supply was unchanged at 3.141 billion bushels with usage unchanged at 2.443 billion bushels and a stock to use ratio of 28.6%. The projected season average price of $7.50 to $8.70 a bushel was lowered 10 cents on the bottom side and 30 cents on the top end. Global stocks are expected to decrease marginally 17 million bushels from last month’s projection to 6.493 billion bushels on what has been considered a mixed report for world stocks. Beginning stocks globally were raised slightly as the ending stocks were lowered. Production in the Black Seas region was reduced, but not as much as expected. Australian production was unchanged compared to their government’s cut of 130 million bushels in production estimates this week. The trade was expecting world stocks to be reduced 100  million bushels more. December wheat at mid-morning traded down 9 ½ cents at

$8.74 ¼ with support at $8.72 and resistance at $9.04. July 2013 wheat has also traded down 6 ½ cents to $8.57 ¼ with support at $8.53 and resistance at $8.73. 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 is planted this fall. Over the past 31 years the average difference between the September projection for U.S. ending stocks and the final estimate has been 107 million bushels with 15 years below the final estimate and 16 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 October 11, 2012.     

Supply

2004/
2005

2005/
2006

2006/
2007

2007/
2008

2008/2009 2009/2010  2010/2011  2011/2012USDA Estimated 2012/2013USDAProjected

 

 

 

 

 

 

 

 

 

 

Acres Planted
(million acres)

59.7

57.2

57.3

60.5

63.2

59.2

53.6

54.4

56.0

Acres Harvested

50.0

50.1

46.8

51.0

55.7

49.9

47.6

45.7

48.8

U.S. Average Yield

43.2

42.0

38.6

40.2

44.9

44.5

46.3

43.7

46.5

Beg. Stocks
(million bushels)

546

540

571

456

306

657

976

862

743

Production

2158

2105

1808

2051

2499

2218

2207

1999

2268

Imports

71

82

122

113

127

119

97

112

130

Total Supply

2775

2727

2501

2620

2932

2993

3279

2974

3141

Use

         

 

 

 

 

Food

907

915

938

947

927

919

926

941

950

Seed

79

78

82

88

78

69

71

77

73

Feed

187

153

117

15

255

150

132

163

220

Exports

1063

1009

908

1264

1015

879

1289

1050

1200

Total Use

2235

2155

2045

2314

2275

2018

2417

2231

2443

U.S. Ending Stocks

540

571

456

306

657

976

862

743

698

Foreign Stocks

4993

4837

4205

4322

5482

6393

6411

6556

5795

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%

28.6%

Supply and Demand Projections and Historical Data Source: USDA