By Darin Newsom, DTN Senior Analyst
OMAHA (DTN) — There is ample room for surprises in the June USDA Supply and Demand and Crop Production reports. The most-watched numbers will likely be U.S. ending stocks, with an old friend (2009 corn production) possibly rising from the dead once again to haunt both 2010-2011 and 2011-2012 estimates. All in all, pre-report estimates should be viewed as bullish for corn and mixed for wheat and soybeans
USDA will release its latest Crop Production and World Agricultural Supply-and-Demand Estimates (WASDE) reports at 7:30 a.m. CDT Thursday.
2010-2011 US ENDING STOCKS
Corn ending stocks are expected to decrease once again, with many eyeing a potential cut in 2010-2011 yield. However, don’t overlook the possibility of a reduction in beginning stocks, as USDA might continue to whittle away at the still-curious 2009 production number. Demand could also be reduced, with exports being the leading candidate. The current pace of weekly export shipments indicates a possible decrease of expected demand by about 95 million bushels.
Soybean and wheat ending stocks are expected to increase slightly, again likely due to minor decreases in export demand. With corn trumping both wheat and soybeans, numbers close to pre-report estimates could be viewed as bullish.
2011-2012 US ENDING STOCKS
New-crop ending stocks of corn are expected to decrease by about 129 mb. Given the expected old-crop reduction of 24 mb, one could surmise new-crop supply and demand tightening by 125 mb. The most likely candidate would be a reduction in production. If acreage is left unchanged at 92.2 million acres (planted) and 85.1 ma (harvested), implied yield would be 157.5 bushels per acres as compared to the 158.7 bpa May estimate and 161.7 bpa trendline yield. Again assuming no change in acreage, this would imply poor crop conditions are overstated by about 2{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} at this time.
Soybean ending stocks are expected to increase slightly (10 mb), possibly due to a decrease in export demand given the size of South American supplies. New-crop wheat ending stocks are expected to fall due in large part to decreases in production.
2011-2012 WINTER WHEAT PRODUCTION
All-wheat production is expected to decrease by about 211 mb. Winter wheat production is projected to be trimmed by 93 mb, what some would consider a rather conservative amount given record-poor crop conditions over the course of the growing season. Given this number, spring wheat production could be expected to fall by about 118 mb. Again, assuming no changes in acreage (though HRW harvested acres could be reduced due to increased abandonment), all-wheat average yield would only drop to 41.7 bpa from the May estimate of 42.5 bpa. Ultimately, this will likely be an overestimation.
WORLD ENDING STOCKS
Wheat global ending stocks for 2011-2012 could increase, possibly moving back above the May 2010-2011 estimate of 182.20 million metric tons. Production increases are possible in both the 12 growing states of the former Soviet Union (FSU-12) and possibly Europe (EU-27) given the recent rounds of rain in Germany and France.
Global corn ending stocks for both 2010-11 and 2011-12 could be trimmed from May estimates due to reductions in the U.S.
World soybean ending stocks are expected to remain unchanged from May estimates with few changes seen in either Brazil or Argentine production.
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Posted with DTN Permission by Haylie Shipp
