Uncertainty in Production Forecasts
(DTN) This year's erratic weather pattern makes predicting the future in terms of commodity production, land prices and general economic status particularly challenging. But that didn't stop The Agricultural & Applied Economics Association from conducting its annual July survey of members, seeking just such prognostications. Here's a snapshot of what 16 university and industry economists see ahead.
CORN
The range for corn production is 12.87 billion to 13.5 billion bushels, with an average estimate of 13.17 bb, vs. USDA's July 13.47 billion bushel projection. Ending stocks were estimated between 600 million and 930 million bushels, with the average 789 million. Finally, the national average corn price for the marketing year ranged from $5.56 to $6.80.
"The risk of a short crop, perhaps below 13 billion bushels, is increasing," said Dan O'Brien, Kansas State University. "If that is the case, stocks will head for a record-low stocks-to-use ratio, under 5%, and we will need to ration half-a-million bushels. That would suggest a season-average cash price of $6.50 or above."
Noting that estimates of acres lost to flood waters range from 400,000 to 2 million, he believes USDA's re-survey will find lower corn acreage by about 500,000 -- dropping from 92.3 million to 91.8 million. "The high ridge that is bringing heat to the Corn Belt during key development stages could have a marginal impact, yielding a 13.25 billion crop, or cause a major reduction, dropping the crop under 13 billion," he noted.
In fact, O'Brien put the odds at 70% that the crop won't exceed 13 billion and we will see a record-tight stocks-to-use ratio:
"The question is, 'Is rationing occurring,'" he said, with usage expected to be down 16%, feed down 44%, exports down 8% and food/seed/industrial up 6%. "USDA reports grain-consuming animal units at 94.3 million, up from 92.9 million in 2010, so distillers' grains and wheat will need to make up the difference in feed needs."
The crude oil price estimate for the next 11 months averaged $104.94, with the economists projecting the low will be $87.40 and the high $112.67.
SOYBEANS
The survey respondents expect soybean production between 3.17 billion and 3.255 billion bushels, with an average of 3.2 billion. They put exports between 1.44 billion and 1.525 billion, averaging 1.487 billion. The average ending stocks forecast is 157 million bushels. Average farm prices range from $11.50 to $15, with the average at $13.24.
Soybean supply-demand does not seem to have any outstanding features at this time, according to Cory Walters, University of Kentucky. "The stocks-to-use ratio is at relatively low levels, but not records. Both U.S. and world production appear to offer no surprise; use is projected to be more or less flat for the third year in a row, with China's use rising but not as rapidly, and the EU's use down." U.S. crop conditions are about normal for now, he said -- but there is a lot of risk remaining in the season with the potential for yields to go up or down. "Because stocks are comparatively low, should a surprise occur, the price shock could be dramatic."
WHEAT
Wheat production estimates range from 2.045 billion to 2.15 billion bushels with an average of 2.093 billion. Export estimates range from 1.01 billion to 1.25 billion with an average of 1.154 billion and average ending stocks of 657 million bushels. The price range is $6.08 to $7.50, (average $7.08).
Wheat supplies are comfortable both in the U.S. and globally, though the ending stocks-to-use ratio will be down the second year in a row, noted Ed Usset, University of Minnesota. "Crops in Kazakhastan, Ukraine and Russia look better this year, after last year's ravaging drought. The U.S. is still the world's largest wheat exporter, and our 2011 crops promise to be mixed in terms of production," he said:
If you look at the wheat fundamentals only, it's hard to understand why wheat is $7, he said. "It is due to the corn market."
LIVESTOCK
Looking at quarterly and annual livestock production, the economists expect greater production in both 2011 and 2012 for each category except beef:
http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=4377d365-60ef-42c6-b468-f07bce00071b
CORN
The range for corn production is 12.87 billion to 13.5 billion bushels, with an average estimate of 13.17 bb, vs. USDA's July 13.47 billion bushel projection. Ending stocks were estimated between 600 million and 930 million bushels, with the average 789 million. Finally, the national average corn price for the marketing year ranged from $5.56 to $6.80.
"The risk of a short crop, perhaps below 13 billion bushels, is increasing," said Dan O'Brien, Kansas State University. "If that is the case, stocks will head for a record-low stocks-to-use ratio, under 5%, and we will need to ration half-a-million bushels. That would suggest a season-average cash price of $6.50 or above."
Noting that estimates of acres lost to flood waters range from 400,000 to 2 million, he believes USDA's re-survey will find lower corn acreage by about 500,000 -- dropping from 92.3 million to 91.8 million. "The high ridge that is bringing heat to the Corn Belt during key development stages could have a marginal impact, yielding a 13.25 billion crop, or cause a major reduction, dropping the crop under 13 billion," he noted.
In fact, O'Brien put the odds at 70% that the crop won't exceed 13 billion and we will see a record-tight stocks-to-use ratio:
"The question is, 'Is rationing occurring,'" he said, with usage expected to be down 16%, feed down 44%, exports down 8% and food/seed/industrial up 6%. "USDA reports grain-consuming animal units at 94.3 million, up from 92.9 million in 2010, so distillers' grains and wheat will need to make up the difference in feed needs."
The crude oil price estimate for the next 11 months averaged $104.94, with the economists projecting the low will be $87.40 and the high $112.67.
SOYBEANS
The survey respondents expect soybean production between 3.17 billion and 3.255 billion bushels, with an average of 3.2 billion. They put exports between 1.44 billion and 1.525 billion, averaging 1.487 billion. The average ending stocks forecast is 157 million bushels. Average farm prices range from $11.50 to $15, with the average at $13.24.
Soybean supply-demand does not seem to have any outstanding features at this time, according to Cory Walters, University of Kentucky. "The stocks-to-use ratio is at relatively low levels, but not records. Both U.S. and world production appear to offer no surprise; use is projected to be more or less flat for the third year in a row, with China's use rising but not as rapidly, and the EU's use down." U.S. crop conditions are about normal for now, he said -- but there is a lot of risk remaining in the season with the potential for yields to go up or down. "Because stocks are comparatively low, should a surprise occur, the price shock could be dramatic."
WHEAT
Wheat production estimates range from 2.045 billion to 2.15 billion bushels with an average of 2.093 billion. Export estimates range from 1.01 billion to 1.25 billion with an average of 1.154 billion and average ending stocks of 657 million bushels. The price range is $6.08 to $7.50, (average $7.08).
Wheat supplies are comfortable both in the U.S. and globally, though the ending stocks-to-use ratio will be down the second year in a row, noted Ed Usset, University of Minnesota. "Crops in Kazakhastan, Ukraine and Russia look better this year, after last year's ravaging drought. The U.S. is still the world's largest wheat exporter, and our 2011 crops promise to be mixed in terms of production," he said:
- Hard Red Winter: Smallest crop since 2006 (yield down)
- Hard Red Spring: Smallest crop in four years (yield down)
- Soft Red Winter: Second largest in 10 years (acreage and yield up)
- Soft White: Largest in six years (acreage and yield up)
- Durum: Second smallest since 1988 (acreage down).
If you look at the wheat fundamentals only, it's hard to understand why wheat is $7, he said. "It is due to the corn market."
LIVESTOCK
Looking at quarterly and annual livestock production, the economists expect greater production in both 2011 and 2012 for each category except beef:
http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=4377d365-60ef-42c6-b468-f07bce00071b
Posted by Colvin & Co. at 8/1/2011 5:19 AM 
Categories: Food Security
Tags: corn wheat commodities soybeans ethanol USDA Russia china Livestock
Categories: Food Security
Tags: corn wheat commodities soybeans ethanol USDA Russia china Livestock
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