Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Commodity Prices Turn Higher on Release of USDA’s July Supply and Demand Report
As one might have expected, upon the release of July’s USDA supply and demand report new and old crop corn, soybean, and SRW wheat prices continue to surge higher in e-trade this morning recording double digit gains across the board. USDA made major reductions in projected yield for U.S. corn and soybeans with the national corn yield estimated at 146 bushels per acre, a reduction of 20 bushels since last month. The yield projection for U.S. soybeans was lowered to 40.5 bushels per acre, a reduction of 3.4 bushels from the June estimates. Projected ending stocks for U.S. corn were reduced by almost 700 million bushels from last month for the 2012/13 marketing year. Further, U.S. ending stocks for soybeans were reduced 10 million bushels and U.S. all wheat ending stock projections were reduced by 30 million bushels from the June estimate. Stocks-to-use ratios were projected lower for corn, soybeans, and wheat in both the U.S. and World.
The reduction in the ending stocks estimate for wheat was the only drop not based upon a reduction in the projected yield. Total supply for wheat was increased by 5 million bushels from a 15 million bushel increase in beginning stocks, and a 10 million bushel decrease in production from fewer acres harvested. USDA increased the projected yield for all U.S. wheat from 45.4 last month to 45.6 bushels per acre in the July report. The primary reason for the reduction in the wheat ending stocks estimate was due to a 50 million bushel increase in the projection for U.S. wheat exports offset by a 5 million bushel increase in total supply, a 5 million bushel increase in food, and a 20 million bushel decrease in feed and residual use.
US Supply/Demand Summary, 7/11/12, Million Bushels
|
Corn |
Soybeans |
Wheat |
|||||||
| Crop Year |
11-12 |
12-13 |
12-13 |
11-12 |
12-13 |
12-13 |
11-12 |
12-13 |
12-13 |
| Report Date |
07/11 |
06/12 |
07/11 |
07/11 |
06/12 |
07/11 |
07/11 |
06/12 |
07/11 |
| Carryin |
1,128 |
851 |
903 |
215 |
175 |
170 |
862 |
728 |
743 |
| Production |
12,358 |
14,790 |
12,970 |
3,056 |
3,205 |
3,050 |
1,999 |
2,234 |
2,224 |
| Imports |
22 |
15 |
30 |
15 |
15 |
15 |
115 |
120 |
120 |
| Tot Supply |
13,508 |
15,656 |
13,903 |
3,286 |
3,395 |
3,235 |
2,977 |
3,082 |
3,087 |
|
|
|
|
|
|
|
|
|
|
|
| Feed |
4,550 |
5,450 |
4,800 |
|
|
|
169 |
220 |
220 |
| Crush/Mill* |
1,375 |
1,395 |
1,390 |
1,675 |
1,645 |
1,610 |
940 |
945 |
950 |
| Ethanol Prod |
5,050 |
5,000 |
4,900 |
|
|
|
|
|
|
| Seed/Other |
30 |
30 |
30 |
101 |
125 |
124 |
77 |
73 |
73 |
| Exports |
1,600 |
1,900 |
1,600 |
1,340 |
1,485 |
1,370 |
1,048 |
1,150 |
1,200 |
| Total Use |
12,605 |
13,775 |
12,720 |
3,116 |
3,255 |
3,105 |
2,234 |
2,388 |
2,423 |
| Carryout |
903 |
1,881 |
1,183 |
175 |
140 |
130 |
743 |
694 |
664 |
| Stocks/Use Rate |
7.20% |
13.70% |
9.30% |
5.60% |
4.30% |
4.20% |
33.30% |
29.10% |
27.40% |
| Avg Price |
$6.10 |
$4.60 |
$5.90 |
$12.30 |
$13.00 |
$14.00 |
$7.25 |
$6.20 |
$6.80 |
*Excludes corn for ethanol
World S& D Summary, 7/11/12, Million Metric Tons
|
Corn |
Soybeans |
Wheat |
|||||||
| Crop Year |
11-12 |
12-13 |
12-13 |
11-12 |
12-13 |
12-13 |
11-12 |
12-13 |
12-13 |
| Report Date |
07/11 |
06/12 |
07/11 |
07/11 |
06/12 |
07/11 |
07/11 |
06/12 |
07/11 |
| Carryin |
124.31 |
129.19 |
129.37 |
70.13 |
53.36 |
52.51 |
197.23 |
195.56 |
197.18 |
| Production |
873.7 |
949.93 |
905.23 |
235.88 |
271.03 |
267.16 |
694.69 |
672.06 |
665.33 |
| Total Supply |
998.01 |
1,079.1 |
1,034.6 |
306.01 |
324.39 |
319.67 |
891.92 |
867.62 |
862.51 |
|
|
|
|
|
|
|
|
|
|
|
| Feed |
507.78 |
553.31 |
535.95 |
|
|
|
147.16 |
131.67 |
130.33 |
| Crush |
|
|
|
223.87 |
234.05 |
232.39 |
|
|
|
| Other |
360.86 |
370.08 |
364.56 |
29.55 |
30.90 |
30.76 |
547.58 |
550.20 |
549.73 |
| Total Use |
868.64 |
923.39 |
900.51 |
253.42 |
264.95 |
263.15 |
694.74 |
681.87 |
680.06 |
|
|
|
|
|
|
|
|
|
|
|
| End Carryout |
129.37 |
155.74 |
134.09 |
52.51 |
58.54 |
55.66 |
197.18 |
185.76 |
182.44 |
| Stocks/Use Rat |
14.90% |
16.90% |
14.90% |
20.70% |
22.10% |
21.20% |
28.40% |
27.20% |
26.80% |
Market Strategy
It will take some time for traders to absorb what this report actually means in terms of 2012 U.S. corn and soybean production. There is a time lag between when the data is collected and when the estimates are published, roughly about a week to 10 days. U.S. crop conditions during that time did not improve.
It is important to note that we are currently in a demand driven market. Evidence of that is the nearly 50 million bushel increase in beginning stocks for U.S. corn in the ‘12/‘13 current marketing year that came from adjustments made in the last ‘11/‘12 marketing year. The increase in beginning stocks may be due to demand rationing. Commodity prices are up for a fourth week in a row. Prices do not go up forever. Earlier today in e-trade, Dec ‘12 corn futures were at $7.33; Nov ‘12 soybeans $15.67; and July ‘12 SRW wheat at $8.20 per bushel. Corn and soybean futures prices have softened considerably since early Wednesday morning reflecting, among other things, the extreme volatility in these markets and profit taking. By 2 p.m. EDT on Wednesday afternoon old and new crop corn, soybean, and SRW wheat futures prices were recording double digit losses from Tuesday’s close. USDA is currently considering possible drought relief measures that may be needed to assist farmers hit hard by the drought. An announcement along those lines should be forthcoming in the near future.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.