The following article is from DTN. 10/8/10
Corn and soybean supplies at the end of the current crop year will be tighter than previously thought, according to reports released early this morning by USDA.
For corn, the changes resulted from a sharp cut in yields and an increase in feed usage, which more than offset an increase in beginning stocks, an increase in planted acres and a decrease in export demand.
For soybeans, USDA also lowered yields and planted acreage, but raised exports, taking ending stocks down from last month’s estimates.
The report may be considered bullish for both crops when trade resumes later this morning. “Corn should lead the way higher Friday, with extremely bullish numbers leading to early limit-up calls,” said DTN Senior Analyst Darin Newsom.
The Northern Ag Network’s Russell Nemetz interviewed Henry Kornegay with Jackson Commodities in Billings, MT after the report was released.
For corn, USDA lowered average yield by 6.7 bushels per acre from the September forecast, to 155.8 bushels per acre, below the low end of pre-report estimates. It raised planted acreage about 250,000 acres from the June 30 acreage report, to 88.7 million acres, taking harvested acres to 81.3 million.
Forecasted yields decreased from last month throughout much of the Corn Belt and Tennessee Valley, USDA said, with the largest decline in Illinois of 14 bpa; Indiana and Iowa are both down 10 bpa, Missouri and Nebraska down 9 bpa from last month.
For soybeans, USDA now estimates planted acreage of 77.7 million acres, down 1 percent from the June 30 acreage report, with harvested acreage now forecast at 76.8 million acres. Soybean yields are now expected to average 44.4 bushels per acre, down 0.3 bpa from the September report, and 0.6 bpa below the average trade guess.
If realized, the soybean crop would still be record large. Yields are forecast lower or unchanged in all the major producing states except Illinois, Kentucky, Louisiana, Michigan, New York and Wisconsin. Forecasted yields would be record highs in Illinois, Louisiana, Nebraska, New York, North Dakota and Wisconsin, and Minnesota yield would tie its previous record high.
U.S. SUPPLY AND DEMAND ADJUSTMENTS, ENDING STOCKS
Adopting the new forecasts from NASS, USDA’s World Ag Outlook Board lowered forecasts for 2010/11 ending corn, soybean and wheat stocks. These numbers fell generally near the low end of pre-report forecasts, so this report may be called neutral to bullish when trade resumes.
With beginning 2010/11 corn stocks raised to 1.708 billion bushels following the Sep. 1 quarterly stocks report, USDA also cut estimates for corn exports by 100 million bushels but raised feed use by 150 m bu, taking ending stocks for the year down to 902 million bushels, taking the stocks-to-use ratio down from 8.3 percent to 6.7 percent.
USDA said higher corn 2010/11 beginning stocks raised prospects for 2010/11 feed and residual disappearance, especially in the Sep-Dec quarter. “Larger than expected carryout of old-crop corn combined with an unusually early start to this year’s harvesting suggest heavy new-crop corn use before the Sep 1 beginning of the 2010/11 marketing year. Individual state harvest progress reports suggest that 600 – 700 million bushels of corn were harvested across the South, Southern Plains and southern Corn Belt before Sept. 1. This is about double the level of the preceding two years,” USDA stated.”
In the soybeans, the WAOB raised exports and crush but cut residual use, leaving ending stocks for 2010/11 at 265 million bushels, below the average pre-report estimate. The stocks-to-use ratio fell from 10.6 percent to 8.0 percent.
USDA is now estimating wheat ending stocks for 2010/11 at 853 million bushels, down from a revised 976 m bu for the 2009/10 crop year and below the average trade guess, incorporating lower estimated production and higher expected feed and residual use. The changes took the stocks-to-use ratio from 37 percent to 34.9 percent.
“Overall, this should be viewed as a bullish report for wheat, though it will be driven more by moves in the other grains,” Newsom said.
WORLD SUPPLY AND DEMAND CHANGES
In its world supply and demand tables, USDA cut forecasts for corn, soybeans and wheat ending stocks for 2010/11. “This should be viewed as bullish for grains as a whole,” Newsom said.
For wheat, USDA now expects world ending stocks of 174.66 million metric tons, down from the 177.79 MMT in September. The 2010/11 stocks remain some 50 MMT above the recent low in 2007/08, USDA noted.
USDA lowered 2010/11 ending corn stocks to 132.36 MMT, from 135.56 MMT a month ago.
World soybean ending stocks for 2010/11 are now pegged at 61.42 MMT, down from 63.61 MMT last month, despite an increase in Brazil’s production of 3 MMT.
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Posted with DTN Permission by Haylie Shipp