Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Tighter Ending Stocks Projected
Ending stocks of U.S. corn, soybeans, and wheat were reduced in USDA’s April Supply and Demand report for the ’08/’09 marketing year. World ending stocks were also reduced for corn and soybeans, with an increase projected for wheat. The report, which is viewed as bullish for corn and soybeans, is likely to help the seasonal rally resume for the row crops. The seasonal rally for corn generally runs through June into pollination while the seasonal rally for soybeans runs through August.
Corn Analysis
Changes made to USDA’s ’08/’09 marketing year balance sheet from last month include an increase of 50 million bushels in feed and residual use; and a decrease of 10 million bushels in food, seed and industrial use. The estimate for ethanol demand was left unchanged at 1.7 billion bushels bringing the projection for total domestic use of U.S. corn to 10.340 billion bushels. Exports were left unchanged at 1.7 billion bushels. With total supply now estimated at 13.740 billion bushels and total use projected at 12.040 billion bushels, ending stocks for U.S. corn are now projected at 1.7 billion bushels, a decrease of 40 million bushels from last month’s estimate. The season average farm price for U.S. corn was increased 10 cents per bushel on both ends of the price range, now estimated at $3.90 to $4.00 per bushel.
Brazilian corn production was increased one million metric ton from last month and is now projected at 50.5 MMT. Argentine corn production was left unchanged at 13.5 MMT. Combined production for Brazil and Argentina is projected to be 17.6 MMT less than last year. World ending stocks of corn are now projected at 143.33 MMT as compared to 144.62 MMT a month ago.
Soybean Analysis
The projection for imports was increased 3 million bushels bringing total supply to 3.176 billion bushels. Total soybean use was increased 23 million bushels from last month. Crushings were reduced 5 million bushels; exports increased 25 million bushels; seed use increased 4 million bushels; residual use was left unchanged at 73 million bushels for a total use of 3.011 billion bushels. Ending stocks for U.S. soybeans are now projected at 165 million bushels, a 20 million bushel decrease from a month ago. The season average farm price projection was increased 40 cents per bushel on the low end and 20 cents per bushel on the high end of the price range, now projected at $9.25 to $10.05 per bushel.
Brazilian soybean production was left unchanged from last month at 57 MMT, 2 MMT less than a year ago. Argentine soybean production, now projected at 39 MMT, is 4 MMT less than last month’s estimate and 7.2 MMT less than last year’s production. World ending stocks of soybeans are now projected at 45.84 MMT, 4.11 MMT less than last month and 8.25 MMT less than last year.
Wheat Analysis
The projection for all wheat imports was increased 5 million bushels bringing total supply to 2.930 billion bushels. Food use was left unchanged at 925 million bushels; seed use was increased 1 million bushel, now projected at 79 million bushels; and feed and residual use was increased 50 million bushels, now estimated at 250 million bushels. Total domestic use is now projected at 1.254 billion bushels. Exports were left unchanged at 980 million bushels bringing the total use projection to 2.234 billion bushels. Ending stocks for all wheat, now projected at 696 million bushels, are 16 million bushels less than last month. The season average farm price for all wheat was increased 10 cents per bushel on the low end and left unchanged on the high end of the price range, now projected at $6.80 to $6.90 per bushel.
Australian wheat production is now estimated at 21.5 MMT, an increase of 7.7 MMT from last year. Canadian wheat production, projected at 28.6 MMT, is 8.5 MMT larger than last year. World ending stocks for all wheat are now projected at 158.1 MMT, 35.72 MMT larger than last year.
Marketing Strategy
The April report can be expected to resume the seasonal rally for corn and soybeans. Ending stock estimates for domestic corn, soybeans, and wheat came in below the average for pre-report estimates. Ending stock size is likely to limit the extent of the rally for corn and could accelerate the rally for soybeans, in the short term. Any rally occurring in the row crops will help to stem pressure on wheat futures. Trader attention will now turn to planting progress, watching to see whether any acreage shifts occur. Earlier it was thought that late planting could shift some acres from corn to soybean planting. At this point in time, it is still too early to make any determination on whether any acreage shift will occur. Currently, Dec ’09 corn futures are trading at $4.29; Nov ’09 soybean futures at $9.20; and July ’09 SRW wheat futures are $5.40 per bushel. For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.