The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report on Friday. Hot and dry weather across much of the U.S. caused a reduction in corn yields, especially in the Midwest. Estimates of U.S. corn yields were decreased to 162.5 bushels per acre, below last year’s record of 164.7 bushels per acre. USDA estimates of domestic corn supplies decreased to a seven year low of 1.1 billion bushels.

2010/11 U.S. corn production was decreased by 205 million bushels to 13,160 million bushels on the decrease in average yield. The 2010/11 corn crop is still slated to be the largest on record due to the increased year-over-year planted area. U.S. corn beginning stocks were decreased by 40 million bushels by the USDA, due to higher ethanol use and exports. Domestic corn use for 2010/11 was decreased by 100 million bushels because of a decrease in feed and residual use which was due to increased corn prices. The USDA increased its estimate of U.S. corn exports by 50 million bushels on rising world demand. Ending domestic stocks were reduced by 196 million bushels to 1.1 billion, which is the lowest since 2003/04, putting the stocks to use ratio at a 15-year low. The USDA season-average farm price for corn is estimated at $4.00 to $4.80 per bushel, a midpoint increase of 60 cents.

Global coarse grain trading increased due to the 1.3 million ton increase in U.S. corn exports. Corn import estimates were raised 2.0 million tons for the EU-27 to replace wheat as feed, and Russia’s corn imports were increased by 0.7 million tons as corn will replace barley as feed. World ending stocks for corn were decreased by 3.6 million tons, according to the WASDE Report.

 

The USDA increased its estimate of U.S. soybean production by 50 million bushels to 3.483 billion bushels due to an increase in yields to a record 44.7 bushels per acre. 2010/11 exports were increased by 50 million bushels to 1.485 billion bushels on strong early season sales and an anticipated increase in global import demand lead by China. 2010/11 soybean ending stocks were reduced by 10 million bushels to 350 million bushels because of the increased export demand which more than offset the increased production. U.S. exports were increased by 25 million bushels for 2009/10 due to strong shipments over the final weeks of the marketing year. 2009/10 ending soybean stocks were reduced by 10 million bushels to 150 million bushels because of the increased exports. The USDA season-average farm price for soybeans is estimated at $9.15 to $10.65, up 65 cents from last month as corn and wheat prices have also increased.

 

Global soybean production was estimated at 254.9 million tons, up 1.2 million tons, due to increased production in the U.S. China’s soybean production was reduced by 0.2 million tons to 14.4 million tons on lower yields.

 

U.S. 2010/11 wheat ending stocks were decreased to 902 million bushels because of an increase in demand. Exports were increased by 50 million bushels as wheat supply continues to be a concern in Europe and Asia. The WASDE noted that there is an increased demand for high quality wheat due to poor quality wheat being harvested in parts of the EU-27. The USDA season-average farm price for wheat is estimated at $4.95 to $5.65, up 20 cents from last month’s WASDE.

 

World wheat supplies estimates were decreased by 0.7 million tons on a decrease in global production by 2.7 million tons, which was partially offset by increased beginning stocks. Russia’s wheat production was decreased by 2.5 million tons and the EU-27’s production was reduced by 2.4 million tons. Wheat exports were increased by 2.0 million tons for Canada and 1.4 million tons for the U.S.

 

The USDA decreased both the average U.S. corn yield, and the ending stocks to use ratio due to increased usage. The U.S.’s corn stocks to use ratio is a red flag for the supply and demand of corn. Even though production has significantly increased since 1995, usage has increased at a faster pace, leaving the ratio at a 15-year low. The supply and demand imbalance is continuing to worsen. The U.S. soybean stocks to use ratio could be in the same situation as China is not showing any slow down in their purchases of U.S. grains.

 

Click on the link for the full WASDE report: http://www.usda.gov/oce/commodity/wasde.

 

-Colvin