Agriculture has been experiencing unheard of prices recently after decades of what would be considered a drought of sorts. Many records have fallen as tighter ending stocks, increasing usage and a smaller herd size have pushed dollar figures over the top.
One source for determining price is the World Agricultural Supply and Demand Estimates report. Normally, the report for May has little or no effect on how farmers, traders or investors look at the commodity markets. But this month's report revealed there was more grain around than government experts originally believed.
USDA released it initial World Agricultural Supply and Demand Estimates for 2011/2012 this week noting with spring planting still underway grain projections were qualified as "highly tentative."
According to government figures the 2011/12 outlook for U.S. wheat is reduced with lower carryin and production. Slightly more than 2 billion bushels of all varieties of wheat are expected to be used, down 7 percent from last year. Increased supplies and a return to exporting by the former Soviet states of Russia, Ukraine and Kazakhstan will increase competition for U.S. wheat exports, which is projected to be just over 1 billion bushels, down 225 million bushels from the 2010/11 crop year.
The Department of Agriculture anticipates that corn production will reach a record 13.5 billion bushels thanks in part to a 4-million-acre increase in intended plantings. The 2011/12 yield is expected to be the third highest on record but total U.S. corn use for the year is projected to be down by 1 percent. The use of corn for ethanol is guesstimated up 50 million bushels but feed and residual use is down by the same amount. USDA officials believe with larger foreign corn supplies in play exports of U.S. corn will drop by 100 million bushels.
U.S. oilseed production for the year is projected at 99 million tons, down 1 percent over last year. Soybean totals account for most of the decline but reductions in sunflower seed, canola, and peanut production also are expected to be lower.
USDA prognosticators anticipate soybean production will reach just under 3.3 billion bushels, down 44 million from the 2010 harvest. Domestic soybean oil consumption is expected to increase by 7 percent primarily due to gains in biodiesel production.
Even with a projected increase in global import demand, with lower U.S. supplies and higher South American output, has USDA experts predicting soybean exports to be down slightly at 1.6 billion bushels.
Commodity traders considered the report bearish. While soybeans moved lower, corn prices were limit down midweek on the news.