OMAHA (DTN) — The July USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports should set off fewer fireworks than we saw following the June 30 quarterly stocks and planted acreage reports.
Traders were most interested in what USDA economists would do in the 2010 corn crop balance sheet, given the June quarterly stocks estimate for corn, which was 368 million bushels (mb) above the average pre-report estimate. Small adjustments were made in several categories, leading to an increase in ending stocks from the June report’s 730 mb to 880 mb.
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2010-2011 US ENDING STOCKS
At 880 mb, corn ending stocks rose less than the trade’s average estimate of 905 mb. This puts the ending stocks-to-use ratio at 6.6{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} versus 5.4{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} in June. USDA pegged corn feed and residual use at 5.0 billion bushels; food/seed/industrial at 6.43 bb, with the ethanol component at 5.05 bb; and exports, 1.875 bb.
Soybean ending stocks are pegged at 200 mb. This increased the U.S. ending stocks-to-use ratio to about 6.1{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}.
U.S. old-crop wheat ending stocks now are pegged at 861 mb.
2011-2012 US ENDING STOCKS
Sanow noted that the July look at new-crop ending stocks will probably be dropped in the recycle bin about as quickly as it was released given the re-survey of acreage in North Dakota, South Dakota, Minnesota and Montana (set for release in August).
Corn ending stocks were pegged at 870 mb, below the trade’s expected 994 mb but above the June figure of 695 mb. USDA’s national season-average price range was lowered from $6-$7 in June to $5.50-$6.50.
“Given traders were expecting larger numbers for both old-crop and new-crop ending stocks after the larger-than-expected June quarterly stocks number, Tuesday morning’s estimates could be viewed as slightly bullish for corn,” said DTN Analyst John Sanow. “On the new-crop size, the 270 mb increase in production was largely offset by a 245 mb rise in demand.”
Soybean ending stocks dropped as expected, to 175 mb. That is a more modest reduction than the trade’s average 169 mb target. The ending stocks-to-use ratio now is 5.4{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}. Though the season-average price was lowered $1 at each end of the range, projected at $12 to $14, it is still a record level.
“The report for beans should be considered neutral-to-bearish, as old-crop ending stocks climbed 20 mb above June due to another decrease in exports while new-crop stocks fell less than expected to 175 mb,” Sanow said.
2011-2012 WINTER WHEAT PRODUCTION UP
As expected, all-wheat production increased from USDA’s June estimate of 2.06 bb to 2.11 bb. Spring wheat was estimated at 616 mb, the same as last year and above the trade’s average expectation of 551 mb. Traders are likely to take this number with a grain of salt considering the Northern Plains acreage re-survey, Sanow said.
At 1.49 bb, winter wheat production is up slightly from 2010. Compared with USDA’s June report, the total was raised 3{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}; hard red winter, 2{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}; soft red winter, 6{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}; and white winter 1{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3}.
“All-wheat production came in 35 mb above the pre-report estimate, though this was offset by a 100 mb increase in exports, meaning ending stocks decreased 17 mb from June when traders thought an increase was coming,” Sanow said.
2011-2012 WHEAT ENDING STOCKS
New-crop wheat supplies rose 90 mb as higher carry-in and production more than offset reductions in imports and higher use. Beginning stocks rose 52 mb, mainly reflecting higher estimated carryout for 2010-11 in keeping with the June 30 grain stocks report. Production is forecast at 2.1 bb, up 48 mb from last month. The stocks-to-use ratio is 29{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} — quite ample.
NEW-CROP WORLD ENDING STOCKS
World ending stocks should be viewed as bearish for corn, neutral for beans and neutral to bullish for wheat, Sanow said.
Global ending stocks for 2011-2012 crop wheat were unchanged from the June report, at 184.26 mmt, as FSU-12 production dropped from 100.6 mmt in June to 99.5 but EU-27 production rose from 131.5 to 132.12 mmt.
Corn ending stocks jumped in both marketing years: old-crop rose from 117.44 mmt in June to 120.88 in July and new-crop, from 111.89 to 115.66. While USDA increased China’s 2011 imports by 1.5 mmt to 2.0 mmt, that is well below some trade expectations.
“As expected, world stocks for corn rose to a more comfortable level in both marketing years. New-crop stocks fell when traders thought an increase was looming.
Old-crop soybean stocks increased from 64.53 mmt to 65.88, while new-crop beans inched higher, from 61.59 mmt to 61.97 mmt.
“In beans, only slight increases were seen, keeping the global picture at a comfortable level,” Sanow said.
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Posted with DTN Permission by Haylie Shipp
