USDA's latest report sets up 2011 acreage competition battle

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By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.

Strong demand and high prices for grains, oilseeds and cotton is triggering huge interest in how many acres of each crop will be planted next year.

 

USDA's Nov. 9 Crop Production Report says U.S. farmers will grow less corn than projected last month, but still the third highest crop on record. USDA pegged corn production at 12.540 bushels, down from the 12.664 billion bushels projected last month. USDA took corn yields down to 154.3 bushels per acre, compared to 155.8 in Oct.

 

Corn ending stocks for 2010/11 are projected 75 million bushels lower. At 827 million bushels, ending stocks would be the lowest since 1995/96 and represent a carryout of 6.2 percent of projected usage. In 1995/96, carryout dropped to 5 percent of estimated usage.

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Corn use for ethanol is raised 100 million bushels with record October ethanol production indicated by weekly Energy Information Administration data and favorable ethanol producer margins. Ethanol prices continue to track higher with corn prices, supporting returns for ethanol producers. Although small relative to domestic usage, higher ethanol exports and lower imports are also expected to add to corn use for ethanol with high sugar prices limiting the availability of ethanol from Brazil.

 

The season-average farm price for corn is projected at $4.80 to $5.60 per bushel, up 20 cents on both ends of the range and well above the previous record of $4.20 per bushel in 2007/08.

 

Soybean production is forecast at 3.375 billion bushels, down 33 million from last month. The soybean yield is projected at 43.9 bushels per acre, down 0.5 bushels from the previous estimate. Total U.S. oilseed production is projected at 101.8 million tons, down 1 million from last month as lower soybean and cottonseed production are only partly offset by higher peanut production.

 

USDA raised soybean exports by 50 million bushels to a record 1.57 billion due to increased global import demand and to a record sales pace, especially to China which accounts for over 70 percent of known U.S. soybean export sales through October. Soybean ending stocks are projected at 185 million bushels, down 80 million from last month. China's forecasted soybean imports have been increased by 2 million metric tons to 57 million metric tons, a one-year increase of 13.2 percent.

 

Iowa Soybean Association (ISA) CEO Kirk Leeds commented on today's reports. “This is clearly a demand-driven market for soybeans," Leeds said. "I am actually surprised that this seems to be news to many analysts. Global demand for soybeans, soybean meal and soybean oil remains incredibly strong. Even with a record crop, projected carryover for soybeans is going to be extremely tight. With the recent action by the Federal Reserve to pump more dollars into the system, the resulting lower value of the U.S. dollar will support even more exports of soybeans and other commodities. The market is going to battle all winter to try to gain more soybean acres.

 

Soybean oil ending stocks for 2010/11 are raised this month due to higher beginning stocks reported by the U.S. Census Bureau and to reduced domestic disappearance reflecting lower projected food use of soybean oil.

 

Prices for soybeans and products are projected higher for 2010/11. The U.S. season-average soybean price range is projected at $10.70 to $12.20 per bushel, up 70 cents on both ends. The soybean meal price is projected at $310 to $350 per short ton, up 20 dollars on both ends of the range. The soybean oil price range is projected at 42.5 to 46.5 cents per pound, up 3 cents on both ends of the range.

 

U.S. wheat ending stocks for 2010/11 are projected 5 million bushels lower this month as downward production revisions of 11 million bushels for Hard Red Spring (HRS) wheat and 4 million bushels for durum more than offset higher projected imports. Imports are raised 10 million bushels with increases for Soft Red Winter (SRW) wheat and durum. Exports are unchanged, but shifts among classes result in higher projected exports of Hard Red Winter and HRS wheat and reductions for SRW and durum. The projected season-average price received by producers is narrowed 5 cents on each end of the range to $5.25 to $5.75 per bushel. Heavy early season marketings and forward sales limit upside potential for the season-average farm price.

 

The U.S. 2010/11 cotton supply and demand estimates include lower production, lower domestic mill use, and higher exports relative to last month. Production is lowered 455,000 bales to 18.4 million, as reductions for Texas are partially offset by increases in the Southeast and Delta. Domestic mill use is reduced 150,000 bales to 3.45 million in response to recent sharply higher prices. Exports are raised 250,000 bales to 15.75 million, based on increased foreign demand and extremely strong export sales to date. Ending stocks are reduced 500,000 bales to 2.2 million bales, the lowest since 1925. The forecast range for the marketing year average price received by producers of 74 to 86 cents per pound is raised 7 cents on both ends. The midpoint of the range, if realized, would be the highest price since the Civil War.

 

For an audio overview and analysts' perspectives on the report, go to:

http://www.agri-pulse.com/Audio-Tuesday.asp

 

For more Agri-Pulse stories:

www.Agri-Pulse.com

 

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