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WASDE Predicts Fewer Bushels of Corn

posted on October 12, 2012

A senior U.S. trade official predicted this week that U.S. farm exports will fall by as much as $2 billion this year because of the drought.

America’s Chief Agricultural Negotiator Isi Siddiqui (pron. IZ-zy suh-DEE-key) said tight supplies of grains are driving up the cost of feed which, in turn, is inflating beef and poultry prices.

The Agriculture Department also is calling for a decline in U.S. farm exports this year. And in its latest supply and demand estimates, this week, USDA reduced its previous guess on domestic corn production. 

WASDE Predicts Fewer Bushels of Corn

While the September report found fewer bushels of corn in farm country more bushels of wheat and soybeans were expected by the end of harvest. But the bigger story can be found deeper in the numbers.

USDA officials cut their U.S. corn production estimate by 21 million bushels to 10.7 billion bushels. If realized, that would be the 8th-largest harvest on record. The national average yield was cut to 122 bushels per acre, but the report indicated farmers planted an additional 500,000 acres.

The U.S. stocks-to-use ratio in September continued its razor-thin trend falling to an even skinnier 5.6 percent – a full percentage point lower than last month. While the ratio is tight, it remains above the 5 percent seen in 1996.

Government analysts also reduced projected corn exports by 100-million bushels based on slow sales and strong competition from Brazil.

Globally, corn carryout shrank by more than 6.5 million metric tons putting the global stocks-to-use ratio at 13.7 percent -- its lowest level in nearly 15 years.

Early season cash and futures prices, as well as premiums for forward contracting, helped squeeze the season-average price by 10 cents to between $7.10 and $8.50 per bushel.

Planted acres for soybeans were projected to increase by 9 percent, while average yields are predicted to rise 7 percent to 37.8 bushels per acre. If realized, U.S. soybean production will hit 2.86 billion bushels – 6 percent lower than last year and 15 percent lower than the record year of 2010. 

Official domestic soybean ending stocks figures were increased by 13 percent, putting the stocks-to-use ratio at 4.5 percent.  That’s slightly tighter than last month but it’s the thinnest margin since 2003. U.S. exports were projected to rise by nearly 20 percent to 1.3 billion bushels due to increased supply and lower prices.

The global soybean stocks-to-use ratio is projected at nearly 21 percent. While deemed adequate by some private firms, ever-increasing Chinese demand is predicted to leave little room for weather shortfalls in the years ahead.

The official average soybean price range is estimated at $14.25 to $16.25 per bushel narrowing the guess by 75 cents on both ends of the scale.

U.S. wheat production estimates were 1 million bushels higher at 2.3 billion bushels. However, lower domestic wheat ending stocks and increased feeding dropped the stocks-to-use ratio by 2 percentage points from last month to 26.3 percent -- its lowest in 5 years.

The projected average price is $7.65 to $8.55 per bushel reducing both ends of the range by 15 cents.

Notions of increased production accompanied by tighter supplies, pushed grain markets higher.  Despite a seemingly bearish report for soybeans and wheat, prices rallied. And tighter corn supplies put the bears in hibernation on LaSalle Street, where December corn moved nearly limit-up on the news Thursday.

Tags: agriculture corn exports soybeans WASDE wheat


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