Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
USDA Cuts Corn, Soybean, and Wheat Stocks
Ending stock projections for the ‘09/‘10 and ‘10/‘11 marketing years for U.S. corn, soybeans, and wheat were reduced in the June report from month ago levels. Soybean and wheat ending stock projections were in line with pre-report expectations. Corn ending stock estimates were lower than pre-report expectations.
Corn Analysis
U.S. corn ending stocks for the current marketing year are now estimated at 1.603 billion bushels, 135 million bushels less than the May estimate. The decline in the estimate for U.S. corn stocks is largely attributed to an increase in demand for ethanol use for both the ‘09/‘10 and ‘10/’11 marketing years. The estimate for U.S. corn ending stocks for the ‘10/‘11 marketing year was lowered 45 million bushels from the previous month, now projected at 1.573 billion bushels. USDA raised their season average farm price estimate for ‘10/‘11 marketing year corn by 10 cents a bushel on both ends of the price range, now estimated at $3.30 to $3.90 per bushel. The season average price for ‘09/‘10 marketing year corn was estimated at $3.45 to $3.65 per bushel.
For the ‘09/‘10 marketing year the estimate for Brazilian corn production was lowered .5 MMT, now estimated at 53 million metric tons. The estimate for Argentina corn production was increased 1.5 MMT, now projected at 22.5 MMT. For the ‘10/‘11 marketing year, USDA is now projecting corn production for Argentina at 21 MMT and Brazil corn production at 51 MMT. World corn ending stock estimates were reduced from last month for both marketing years. World corn ending stocks are now projected at 147.32 million metric tons (a reduction of 6.89 MMT) for the ‘10/‘11 marketing year and 143.41 MMT (3.63 MMT less than last month) for the ‘09/‘10 marketing year.
Soybean analysis
U.S. soybean ending stocks for the ‘09/‘10 marketing year were reduced 5 million bushels from last month, now estimated at 185 million bushels. That reduction was carried forward into the ‘10/‘11 marketing year with ending stocks now estimated at 360 million bushels, as compared to 365 million bushels a month ago. The season average farm price for U.S. soybeans was reported at $9.50 per bushel for the ‘09/‘10 marketing year and left unchanged from last month’s estimate at $8.00 to $9.50 per bushel for the ‘10/‘11 marketing year.
The Brazilian soybean production estimate for the current marketing year was increased 1 MMT from last month, now projected at 69 MMT. The Argentine soybean production estimate was left unchanged from last month at 54 MMT for a combined total production of 123 MMT for the ‘09/‘10 marketing year. World ending stocks for soybeans were increased for both the ‘09/‘10 (from 63.76 MMT to 65.47 MMT) and ‘10/‘11 marketing years (from 66.09 to 66.99 MMT).
Wheat Analysis
U.S. all wheat ending stocks were reduced 20 million bushels for the current marketing year, now estimated at 930 million bushels. Ending stock projections for ‘10/‘11 marketing year wheat were reduced by 6 million bushels, now projected at 991 million bushels. The season average farm price for U.S. wheat was reduced by 10 cents per bushel on the low end and 30 cents per bushel on the high end of the price range for ‘10/‘11 marketing year wheat. The season average farm price for the ‘09/‘10 marketing year was reported at $4.85 per bushel.
Canadian and Australian wheat production estimates were left unchanged from last month at 26.5 and 22.5 MMT for the current marketing year and 24.5 and 22 MMT, respectively, for the ‘10/‘11 marketing year. The estimates for world wheat ending stocks were reduced for both marketing years. World ending stocks for ‘09/‘10 marketing year wheat are now estimated at 192.9 MMT, .47 MMT less than last month. World ending stocks for all wheat for the ‘10/‘11 marketing year are now projected at 193.93 MMT, 4.16 MMT less than last month’s estimate.
Marketing Strategy
The June supply and demand report can be viewed as bullish for corn, bullish old crop soybeans, bearish new crop soybeans, and bearish for wheat. However, commodity traders are not likely to pay much attention to this report due to outside market forces, the weather, and the soon to be released June 30 Planted Acreage report which could increase acreage and yield estimates for 2010 corn and soybean production. Currently, new crop Dec ‘10 corn futures are trading at $3.61; Nov ‘10 soybean futures at $8.91; and July SRW wheat at $4.31 per bushel. Nearby old crop July corn futures are trading at $3.41; and July ‘10 soybean futures are trading at $9.32 per bushel. The nearby U.S. dollar index is at 87.18; nearby crude at $74.38; and the Dow is trading at 10,095.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.