Grain Marketing Highlights – September 10, 2010

Carl German, Extension Crops Marketing Specialist;

USDA Slashes Corn Yields, Hikes Soybean Yields
Fri Sep 10, 2010

U.S. CROP PRODUCTION (Million Bushels) 2010-11

  Sept Avg High Low Aug 2009-10
Corn 13,160 13,199 13,410 12,880 13,365 13,110
Soybeans 3,483 3,406 3,500 3,354 3,433 3,359


U.S. AVERAGE YIELD (Bushels Per Acre) 2010-11

  Sept Avg High Low Aug 2009-10
Corn 162.5 163.1 165.9 160.0 165.0 164.7
Soybeans 44.7 43.8 44.9 43.0 44.0 44.0


U.S. ENDING STOCKS (Million Bushels) 2010-11

  Sept Avg High Low Aug
Corn 1,116 1,125 1,312 929 1,312
Soybeans 350 304 373 129 360
Wheat 902 914 995 830 952


U.S. ENDING STOCKS (Million Bushels) 2009-10

  Sept Avg High Low Aug 2008-09
Corn 1,386 1,412 1,476 1,350 1,426 1,673
Soybeans 150 151 171 125 160 138


WORLD ENDING STOCKS (Million Metric Tons)

  2010-11 2009-10
  Sept Aug Sept Aug
Wheat 177.79 174.76 195.97 193.97
Coarse Grains 166.76 172.04 189.36 187.86
Corn 135.56 139.20 138.99 139.03
Soybeans 63.61 64.73 62.85 63.50


WORLD PRODUCTION (Million Metric Tons)

  2010-11 2009-10
  Sept Aug Sept Aug
Canada wheat 22.5 20.5 26.5 26.5
Australia wheat 23.0 23.0 22.5 22.5
China Corn 166.0 166.0 155.0 155.0
Brazil corn 51.0 51.0 56.1 54.4
Brazil soybeans 65.0 65.0 69.0 69.0
Argentine soybeans 50.0 50.0 54.5 54.5

Corn Analysis
The 2010 U.S. corn crop won’t be quite as big as previously thought, and ending corn stocks will be tighter, according to USDA’s monthly crop production and supply and demand reports released early Friday. Cuts were a little deeper than many analysts had expected, so the report may be called neutral to bullish for corn when trade resumes later this morning. However, the impact remains to be seen due to sluggish economic conditions in the U.S. and throughout the world.

USDA now projects 2010 corn production at 13.160 billion bushels, on yields averaging 162.5 bushels per acre, down from 13.4 billion bushels and 165.0 bushels per acre in the August report. Forecasted yields decreased from last month throughout much of the Corn Belt, Tennessee Valley and Delta, while yields were up from August in the lower portions of the Southeast. Nevertheless, U.S. corn production is predicted to be record high. In its monthly supply and demand tables, USDA took 2010/11 corn ending stocks down to 1.116 billion bushels, on a decrease in production and feed and residual use and an increase in exports.

USDA lowered ending 2010/11 corn stocks 106 million bushels from last month, to 1.1 billion bushels, the lowest since 2003/04, and stocks as a percent of total use would be the lowest since 1995/96. USDA raised its forecast of the season average farm price to range between $4.00 to $4.80, up from $3.50 to $4.10 last month.

USDA lowered world ending corn stocks to 135.56 MMT from 139.2 MMT last month.

Soybean Analysis
For U.S. soybeans, USDA raised its production estimate by 50 million bushels from August, to 3.483 billion bushels, with yield increased .7 bushels per acre to 44.7 bushels per acre. Both those numbers were near the high end of trade guesses, so the report may be called neutral to bearish for soybeans. Soybean yields are forecast higher or unchanged across the central and northern Corn Belt, with the exception of Michigan, USDA said, and the forecasted yields in Illinois, Minnesota, Nebraska, New York and North Dakota would be record highs. Soybean yields are forecast lower across the Delta, Southern Plains, and with the exception of Louisiana and the Carolinas, the Southeast. As is the case with corn, U.S. soybean production is also projected to be a new record. The department cut 2010/11 soybean ending stocks by 10 million bushels from the August estimate, as increases exports of both old and new crop offset the increase in production. The season average farm price was increased 65 cents per bushel on both ends of the price range, now estimated at $9.15 to $10.65 per bushel.

Wheat Analysis
In its world supply and demand tables, USDA raised world ending wheat stocks for 2010/11, as the economists at the World Agricultural Outlook Board cut estimates for world wheat consumption, more than offsetting a further reduction in world output, down to 643 million metric tons. Ahead of the report, analysts had expected world wheat production around 640 MMT, so the world wheat numbers could be called neutral to bearish. The biggest change in the wheat balance sheet was in exports, which USDA raised by 50 million bushels from the August estimate, resulting in the same size cut in ending stocks.

USDA once again cut estimates of wheat production in the drought-afflicted areas of eastern Europe, taking Russian production down 2.5 million bushels and production in the EU-276 down 2.4 MMT. USDA raised exports for Canada by 2 MMT and by 1.4 MMT for the U.S., more than offsetting reductions for EU-27 and Australia. Global ending stocks are projected 2 MMT higher, with increases in production in EU-27, Canada and Australia. The season average farm price for all U.S. wheat was increased by 25 cents per bushel on the low end and 15 cents per bushel on the high end of the price range, now estimated at $4.95 to $5.65 per bushel.

Another number of interest in recent weeks has been total coarse grain stocks (corn, sorghum, barley, oats and other small grains). This month, USDA lowered world coarse grains 2010/11 ending stocks to 166.76 MMT.

Source: USDA September Report

Market Strategy
Today’s report is important because it is based upon USDA farmer surveys and spot field checks. The primary marketing concern now becomes how much of the actual numbers are already factored into prices? The bullish tone for corn, soybeans, and wheat in this report could be overshadowed by sluggish economic conditions in the U.S. and throughout the world. The bearish tone for world wheat ending stocks could take wheat prices lower. On Thursday afternoon, Dec ‘10 corn futures closed at $4.70; Nov ‘10 soybean futures at $10.46; and July SRW wheat futures at $7.38 per bushel.

For technical assistance in making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.