Thursday's round of reports contained a lot of numbers that were higher than expected.
by Katie Micik, DTN Markets Editor
WASHINGTON (DTN) — USDA pegged the national average corn yield at 171.7 bushels per acre and the soybean yield at 46.6 bpa, both new record highs.
Corn production is forecast at a record 14.4 billion bushels, up 3{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} from the August forecast. The yield increase is a 4.3 bpa bump up from August and 12.9 bpa increase from last year.
USDA estimated soybean production at a record 3.91 billion bushels, also up 3{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} from August. The yield estimate is up 1.2 bpa from August and 3.3 bpa from last year.
The upward revisions to production increased 2014-15 corn ending stocks to 2 bb with a stocks-to-use ratio of 14.7{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}, compared to 13.5{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} in August.
On soybeans, the 2014-15 ending stocks figure came in at 475 million bushels with a stocks-to-use ratio of 13.3{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}.
While U.S. yield, production and ending stocks figures fell within the range of traders' pre-report expectations, USDA's global ending stocks estimates for soybeans and wheat were larger than expected.
USDA pegged global soybean ending stocks for 2014-15 at 90.2 million metric tons, above the highest estimate of 88.2 mmt. USDA increased Brazilian production by 3 mmt and Argentine production by 1 mmt in addition to the U.S. production increases. The stocks-to-use ratio came in at 31.6{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}, up from 30.2{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} last month and 24.9{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} last year.
On wheat, USDA pegged global wheat ending stocks for 2014-15 at 196.4 mmt, above the highest trade estimate of 195.2 mmt. It increased European Union wheat production by a little more than 3 mmt from last month. The global stocks-to-use ratio was estimated at 27.7{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}, up from 27.3{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} last month and 26.5{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} last year.
For DTN's exclusive audio comments, visit: http://listen.aghost.net/…
Crop Production: http://www.nass.usda.gov/…
World Agricultural Supply and Demand Estimates (WASDE): http://www.usda.gov/…
CORN
USDA made several revisions to the demand side of the balance sheet in light of its increased production estimates. It foresees feed and residual use increasing in 2014-15 by 75 mb; food, seed and industrial use increasing by 70 mb; ethanol use increasing by 50 mb; and exports increasing by 25 mb.
Although total usage is forecast at a record 13.6 bb, USDA noted that overall use is only 5 mb higher than 2013-14 because large foreign stocks will prevent a large increase in exports.
The ending stocks estimate increased to slightly above 2 bb. USDA's average forecast price declined from $3.90 in August to $3.50.
Globally, USDA increased its forecasts for old-crop production in Brazil (up 1.3 mmt) and Argentina (up 1 mmt). USDA noted that this is likely to put a damper on U.S. exports in August and September.
For the 2014-15 marketing year, USDA sees Brazil producing 75 mmt of corn, up 1 mmt from August, and Argentina 23 mmt, down 3 mmt from August.
Global ending stocks estimates came in at 189.9 mmt, about even with the average trade estimate, but 2 mmt higher than in August. Historically, it's one of the biggest ending stocks on the books, behind the 1986-1987 and 1987-1988 marketing years when global ending stocks were calculated at 204.9 mmt and 197.7 mmt respectively.
The global stocks-to-use ratio climbed to 19.6{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} from last month's 19.4{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} and last year's 18.2{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}.
SOYBEANS
USDA increased its soybean use estimates by 42 mb in response to its higher production estimates. It increased crush demand by 15 mb and export demand by 25 mb. It also increased residual use by 3 mb. New-crop ending stocks are estimated at 475 mb.
USDA lowered its average farm price from $10.35 in August to $10.
Globally, USDA said relative prices of corn and soybeans in Brazil and Argentina favors soybeans. USDA boosted its forecast for Brazilian production by 3 mmt to 94 mmt. It increased Argentine production by 1 mmt to 55 mmt.
USDA's global ending stocks forecast of 90.2 mmt is one of the largest on record.
WHEAT
USDA did not release updated wheat production numbers on Wednesday. It's waiting for the Small Grains Summary that will be released on Sept. 30.
USDA anticipates 10 mb of increased wheat imports. It also sees exports declining 25 mb, resulting in a 35 mb addition to U.S. ending stocks for 2014-15. Ending stocks are estimated at 698 mb with a stocks-to-use-ratio of 33.4{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}.
Globally, USDA foresees ending stocks at 196.4 mmt.
SORGHUM
USDA sees sorghum production totalling 430 mb, but anticipates ending stocks declining from previous estimates on increased export expectations. USDA pegged ending stocks at 30 mb, below the range of pre-report estimates, down from August's 35 mb estimate.
ANALYSIS
On the domestic side, corn ending stocks for 2014-2015 came in at 2.002, in line with the average pre-report estimate, said DTN Senior Analyst Darin Newsom. Soybean ending stocks were increased to 475 mb, 23 mb over the average pre-report estimate and 45 mb more than what was projected in August. This was due to the almost 100 mb increase in production and 42 mb increase in demand. Wheat ending stocks came in at 698 mb, also above its pre-report estimate of 684 mb.
“Domestic supply and demand could be viewed as neutral to bearish for corn, and bearish for soybeans and wheat,” Newsom said.
On the global side, soybean ending stocks jumped 90.2 mmt, well above the average pre-report estimate of 86.1 mmt and the August WASDE projection of 85.6 mmt, Newsom said. Some of this was due to increased Brazilian production to 94 mmt, as compared to the August estimate of 91.0 mmt. Corn ending stocks also increased, up from 187.8 mmt to 189.9 mmt. This was close to the average pre-report estimate. Global wheat ending stocks were pegged at 196.4 mmt, well above its pre-report estimate due to a solid increase in European Union production.
“September WASDE numbers should be considered neutral to bearish for corn, and bearish for both soybeans and wheat,” Newsom said.
© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
Posted with DTN Permission by Haylie Shipp
