USDA Report - March 10th, 2010

Today the USDA released their revised March production estimates and Supply Demand estimates.

Traders were looking for a smaller production estimate in corn and soybeans than the last USDA estimates. Although the USDA delivered no real surprises, the U.S. corn crop was actually raised by 80 million bushels, some 83 million bushels larger than the trade estimates.

The key takeaway from today’s reports is that world surpluses are building in wheat and soybeans, something we have been harping on since last fall. World coarse grain ending stocks (in days of supply) will be smaller this fall than last, however. We have been recommending that producers use our Sell Signal aggressively to get sales of new crop on the books for months, and there is nothing that changes our idea in today’s USDA reports.

Here is what the USDA said:

WHEAT: U.S. wheat ending stocks for 2009/10 are projected 20 million bushels higher as a reduction in expected food use pushes ending stocks to 1 billion bushels. By-class adjustments reflect the pace of export sales and shipments to date. The projected marketing-year average farm price is raised 5 cents on both ends of the range to $4.80 to $5.00 per bushel as prices received by producers remain stronger than expected.

Global wheat supplies for 2009/10 are projected 2.1 million tons higher mostly reflecting higher beginning stocks in Russia and higher production in Argentina. At 196.8 million tons, 2009/10 world stocks are up 73.5 million tons or 60 percent from the recent low in 2007/08.

COARSE GRAINS: U.S. feed grain supplies for 2009/10 are projected slightly lower with a downward revision in estimated corn production and a reduction in projected barley imports. Corn production is lowered 20 million bushels based on updated estimates of yields for Illinois and Minnesota, and harvested area for Michigan. U.S. corn production remains a record at the revised estimate of 13.1 billion bushels. U.S. corn exports are lowered 100 million bushels as larger foreign supplies increase competition. U.S. corn ending stocks for 2009/10 are projected 80 million bushels higher with the downward revision in production more than offset by reduced export prospects.

The projected 2009/10 marketing-year average farm price for corn is lowered 20 cents on the top end of the range to $3.45 to $3.75 per bushel. Projected farm prices are also lowered for sorghum and oats. The all barley farm price is projected higher at $4.40 to $4.60 per bushel compared with $4.25 to $4.55 per bushel last month.

Global coarse grain supplies for 2009/10 are projected 5.7 million tons higher this month mostly reflecting larger global corn supplies. Coarse grain beginning stocks are raised 1.0 million tons with more than half of the increase from corn as an upward revision for 2008/09 production in Argentina and lower 2008/09 exports for South Africa boost world corn carryin for 2009/10. World coarse grain production for 2009/10 is raised 4.7 million tons with higher corn and sorghum production more than offsetting lower barley, rye, and mixed grain output.

Global coarse grain imports and exports for 2009/10 are largely unchanged, but major shifts among exporters mostly reflect larger corn supplies in Argentina and South Africa. Corn exports are raised 2.5 million tons for Argentina and 1.0 million tons for South Africa. Corn exports are also raised 0.5 million tons for India. Mostly offsetting are corn export reductions of 1.0 million tons for Brazil and 2.5 million tons for the United States. Global corn exports are raised 0.7 million tons, but a 0.6-million-ton reduction in global barley exports is nearly offsetting. Barley exports are lowered for EU-27 and Argentina. Global consumption of coarse grains and corn, in particular, are little changed, raising ending stocks with the increase in production. Global corn ending stocks for 2009/10 are projected 6.1 million tons higher with increases in most of the world’s major corn exporting countries, including the United States, Argentina, South Africa, and Brazil.

OILSEEDS: U.S. soybean ending stocks for 2009/10 are projected at 190 million bushels, down 20 million from last month. Soybean production is estimated at 3.359 billion bushels, down 2 million from the January estimate as reported in the March Crop Production report. Soybean exports are raised 20 million bushels to a record 1.420 billion reflecting the strong export pace to date. Soybean crush is raised 10 million bushels to 1.730 billion based on a lower projected soybean meal extraction rate. Total soybean meal use remains unchanged as higher projected exports are offset by reduced domestic disappearance. Soybean oil stocks are projected higher due to increased production and lower domestic food use. Soybean oil used for biodiesel is unchanged at 2.2 billion pounds despite a drop in production in January resulting from the loss of the $1.00 per gallon blending tax credit at the end of 2009. Offsetting production gains are expected later in the year as diesel suppliers increase blending to meet biodiesel mandates.

The U.S. season-average soybean price range for 2009/10 is narrowed to $8.95 to $9.95 per bushel. The soybean meal price is projected at $280 to $310 per short ton compared with $270 to $320 previously. The soybean oil price is projected at 33.5 to 36.5 cents per pound, unchanged from last month.

Global oilseed production for 2009/10 is projected at 435.3 million tons, up 1.6 million tons from last month. Higher projections for soybeans, peanuts, rapeseed, and palm kernel are only partly offset by lower cottonseed and sunflowerseed production. Global soybean production is raised 0.9 million tons to 255.9 million. Soybean production for Brazil is projected at a record 67 million tons, up 1 million from last month based on higher yields and harvested area.

Global oilseed ending stocks for 2009/10 are projected at 71.8 million tons, up 0.9 million from last month. Soybeans account for most of the change with increases for Argentina, Brazil, and India only partly offset by lower projected U.S. stocks.