By John Sanow, DTN Analyst
OMAHA (DTN) — The July USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports should offer fewer fireworks (in theory) than the June 30 quarterly stocks and planted acreage reports did. Traders are set to see how USDA accounts for its June quarterly stocks estimate for corn, which was 368 million bushels above the average pre-report estimate, and how it fits in the old-crop balance sheet. Only minor adjustments are expected in bean and wheat stocks and in all-wheat production.
USDA will release its latest Crop Production and WASDE reports at 7:30 a.m. CDT Tuesday.
2010-2011 US ENDING STOCKS
Corn is expected to rise to 905 mb from the June estimate of 730 mb in large part due to diminished export and feed demand. Such an increase (175 mb) would take the U.S. ending stocks-to-use ratio to 6.5{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}, well above June’s 5.4{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} but still a relatively tight number historically, only trailing the tightest stocks-to-use ratio on record of 5{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} in 2005-2006. This should be viewed as bearish, though a number near this may already be accounted for by the market.
Soybean ending stocks are expected to increase slightly by about 18 mb due to decreased export demand. If so, this would increase the U.S. ending stocks-to-use ratio to about 5.9{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}. This would be considered slightly bearish.
2011-2012 US ENDING STOCKS
The July look at new-crop ending stocks will probably be dropped in the recycle bin about as quickly as it’s released given the re-survey of producers in North Dakota, South Dakota, Minnesota and Montana (set for release in August) announced by USDA shortly after the June 30 planted acreage report. As it stands, corn ending stocks are expected to increase to 994 mb, 299 mb above June’s figure. Assuming this increase is based solely on a combination of larger beginning stocks and production, the ending stocks-to-use ratio would settle at about 7.5{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}.
Soybean ending stocks are expected to drop to 169 mb. If harvested acreage of 74.5 million acres and yield of 43.4 bushels per acre are used, total demand should drop to about 3.269 billion bushels, tightening the ending stocks-to-use ratio to roughly 5.2{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}.
2011-2012 WINTER WHEAT PRODUCTION
All-wheat production is expected to increase from USDA’s estimate of 2.058 bb to 2.071 bb despite spring wheat production falling to 551 mb, its lowest level since 2008. Traders are likely to take this number with a grain of salt considering producers will be re-surveyed in the Northern Plains. Questions also remain about the size of this year’s winter wheat crop.
2011-2012 WHEAT ENDING STOCKS
Pre-report estimates have new-crop wheat ending stocks pegged at 702 mb, up 15 mb from the June estimate. If realized, and using the above-mentioned 13 mb jump in production, the domestic ending stocks-to-use ratio would come in at 30.6{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}, which remains above the five-year average and should be considered bearish.
WORLD ENDING STOCKS
Global ending stocks for 2011-2012 crop wheat are expected to increase, tied to increased production from the Black Sea Region. Corn should see a large jump in both marketing years on larger U.S. numbers. Bean stocks could increase slightly in 2010-2011 on another bump in South American production while decreasing for 2011-2012 on a lower U.S. production number.
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Posted with DTN Permission by Haylie Shipp
