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Analysts Dig Into USDA Reports

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Mike Silver of Kokomo Grain discusses WASDI report

The latest World Agricultural Supply and Demand Estimates report shows no change in the projected corn and soybean yields. The 2013 corn yield is projected to be 156.5-bushels per acre. The soybean yield is forecast at 44.5-bushels per acre. American Farm Bureau Federation Economist Todd Davis notes corn production is down slightly from June though. Due to slightly lower harvested acreage expectations – the corn crop is now projected at 13.95-billion bushels – a slight decline from the 14-billion bushel projection in last month’s report. Despite the decrease – Davis points out corn production is still on target for a record-setting year if realized. Davis says the soybean crop could be record-setting as well if the 3.42-billion bushel production forecast is obtained.

Corn and soybean acreage reflected the acreage survey released June 28th – which meant an increase of corn planted acres to 97.4-million and soybean planted acres to 77.7-million. A dip of 50-million bushels to 1.25-billion is expected for 2013-14 corn exports due to a later harvest and tight old crop corn stocks. That would be an increase of 550-million bushels from the 2012-13 marketing year. Davis says the estimate may be optimistic because of South American competition. Corn ending stocks are estimated to build significantly – from 729-million in 2012-13 to a projected 1.959-billion for 2013-14. Davis notes the projections are higher than the trade pre-report predictions of 1.88-billion. He says the elevated corn ending stocks predictions will reflect negatively on marketing-year prices – reducing the estimated 2013 farm price to $4.80 per bushel from $6.95 per bushel in 2012.

U.S. soybean ending stocks are expected to more than double from the 2012-13 marketing year – projected at 295-million bushels for 2013-14. That’s an increase from 265-million bushels in June’s WASDE report. The increase will lower the 2013-14 projected soybean price to $10.75 per bushel from $14.40 per bushel in the 2012-13 marketing year.

WASDE at a Glance

USDA has released the latest World Agricultural Supply and Demand Estimates. This month’s report adopts U.S. area, yield and production forecasts for winter wheat, durum, other spring wheat, barley and oats released by USDA’s National Agricultural Statistics Service. For rice, corn, sorghum, soybeans and cotton – area estimates reflect the Acreage report released by NASS late last month. The next WASDE report – to be released August 12 – will include the first survey-based production forecasts for those crops.

WHEAT: Projected U.S. wheat supplies for 2013/14 are raised slightly this month with lower beginning stocks more than offset by higher production, both based on the latest survey-based estimates and forecasts. Beginning stocks are reduced 27 million bushels as indicated by the June 1 stocks estimate reported in the June 28 Grain Stocks. Production is forecast up 34 million bushels with lower forecast harvested area from the June 28 Acreage report more than offset by higher yields. Production is raised 11 million bushels for Hard Red Winter and 30 million bushels for Soft Red Winter (SRW) wheat. White Winter wheat is forecast down 7 million bushels. For durum, a reduction in area is only partly offset by a higher yield with production forecast down 5 million bushels. For other spring wheat, a reduction in area is more than offset by a higher yield forecast in today’s Crop Production report, adding 4 million bushels to this month’s production forecast. July survey-based yield forecasts for durum and other spring wheat are up 1.6 bushels per acre from last month’s trend based projections. Total U.S. wheat use for 2013/14 is raised 89 million bushels as lower expected domestic use is more than offset by higher projected exports. Projected feed and residual disappearance is lowered 10 million bushels with stronger export demand, especially for SRW wheat. Exports are projected 100 million bushels higher reflecting strong sales, particularly to China. Ending stocks are projected down 83 million bushels. At 576 million tons, stocks are expected to remain well above the 60-year low of 306 million in 2007/08. The projected range for the 2013/14 season average farm price is raised 20 cents on both ends to $6.45 to $7.75 per bushel. At the $7.20-perbushel midpoint, this would be down from the record $7.77 per bushel reported for 2012/13.

Global wheat supplies for 2013/14 are lowered 3.5 million tons reflecting lower projected beginning stocks as world production rises 1.9 million tons. World production for 2013/14 is raised. Global wheat consumption for 2013/14 is raised 5.4 million tons. Global wheat trade is raised with a 5.0-million-ton increase in China imports. World exports are raised 5.0 million tons. World ending stocks for 2013/14 are projected 8.9 million tons lower. At 172.4 million tons, stocks would be the lowest since 2008/09, but well above the 128.8 million in 2007/08.

COARSE GRAINS: Projected 2013/14 U.S. feed grain supplies are lowered this month with reduced beginning stocks for corn and sorghum and lower forecast harvested areas for corn and sorghum from the Acreage report. Corn beginning stocks for 2013/14 are projected 40 million bushels lower. Corn production for 2013/14 is lowered 55 million bushels with the lower harvested area and the projected yield unchanged at 156.5 bushels per acre. Projected production remains just below 14 billion bushels and would be 858 million above the record in 2009/10. Corn supplies for 2013/14 are lowered 90 million bushels as a 5-million-bushel increase in imports only partly offsets the lower beginning stocks and production. This month’s changes to corn use for 2012/13 and 2013/14 largely reflect the lateness of the 2013 crop and expectations for extremely tight supplies later this summer and into early fall. Feed and residual disappearance for 2012/13 is raised 50 million bushels as early harvest of new-crop corn is expected to be sharply reduced from last year. A 10-million-bushel increase in projected imports for 2012/13 also reflects the tight supply situation expected for old-crop corn during the summer quarter. Imports for 2013/14 are raised because the tight supply situation is expected to continue into September. Feed and residual use for 2013/14 is lowered 50 million bushels with tighter beginning stocks and lower production, and also on the lack of early new-crop usage which tends to boost indicated disappearance during the September-December quarter of the new marketing year. Projected exports for 2013/14 are lowered 50 million bushels as tight supplies of corn in early September are expected to limit early season shipments. With lower projected use in 2013/14, ending stocks are raised 10 million bushels and remain just under 2 billion bushels. The projected 2013/14 season-average farm price for corn is unchanged at $4.40 to $5.20 per bushel. The 2013/14 other feed grain farm price projections are also unchanged.

Global coarse grain supplies for 2013/14 are projected 3.6 million tons lower with 2.9 million tons of the decline resulting from the tighter supply situation for corn and sorghum in the United States. Foreign coarse grain supply and use changes this month are relatively small in the aggregate. Global 2013/14 coarse grain trade is mostly unchanged this month with exports down slightly on the reduction for U.S. corn. Global corn consumption is down 2.6 million tons with half of the reduction in the United States. Global corn ending stocks for 2013/14 are projected at 151.0 million tons, down 0.9 million. World corn stocks are expected to be the highest since 2001/02.

OILSEEDS: U.S. oilseed production for 2013/14 is projected at 100.9 million tons, up 0.2 million from last month, with increased soybean production mostly offset by reductions for other oilseeds. Soybean production is projected at 3.42 billion bushels, up 30 million due to increased harvested area. Harvested area, estimated at 76.9 million acres in the June 28 Acreage report, is 0.7 million above the June projection. The soybean yield is projected at 44.5 bushels per acre, unchanged from last month. Soybean supplies are 30 million bushels above last month’s forecast reflecting the production change. With projections for exports and crush unchanged, 2013/14 soybean ending stocks are raised 30 million bushels to 295 million. U.S. soybean supply and use projections for 2012/13 are unchanged. The 2013/14 U.S. season-average soybean price is forecast at $9.75 to $11.75 per bushel, unchanged from last month. Product prices are also unchanged, with soybean meal prices forecast at $290 to $330 per short ton and soybean oil prices forecast at 47 to 51 cents per pound.

Global oilseed production for 2013/14 is projected at 492.9 million tons, up 2.1 million from last month. Higher forecasts for soybeans, rapeseed, cottonseed, and peanuts are only partly offset by reductions for sunflowerseed. Global soybean production is projected at 285.9 million tons, up 0.6 million. Argentina soybean production is reduced due to a lower harvested area estimate for both 2012/13 and 2013/14.

LIVESTOCK, POULTRY, AND DAIRY: The forecast for 2013 red meat and poultry production is reduced from last month on lower beef, pork and turkey production. Beef production is lowered as steer and heifer slaughter in the second quarter was lower than expected. The lower second quarter slaughter more than offsets higher forecast slaughter in the second half of the year. The pork production forecast is reduced, largely on a reduction in fourth-quarter slaughter. USDA’s Quarterly Hogs and Pigs report indicated that despite a record number of pigs per litter in March- May, the pig crop for that period was only fractionally above year-earlier. Turkey production is lowered as hatchery data points toward sharper declines in second-half production. The broiler production forecast is unchanged. Egg production is raised on higher table and hatching egg production. For 2014, the red meat and poultry production forecast is higher based on larger pork production. Pork production increases are driven primarily by gains in pigs per liter as producers have indicated intentions to only gradually expand farrowings in the second half of 2013.

Beef and pork exports for 2013 and 2014 are unchanged. The beef import forecast is lowered for 2013 and 2014 due largely to expected tight supplies in Oceania. Pork imports are raised slightly for 2013 and 2014. Broiler and turkey exports for 2013 are raised on the current strength of trade. Forecasts for 2014 are unchanged. The cattle price forecast for 2013 is lowered from last month as prices have weakened recently. The 2014 price forecast is lowered for the first half of the year. Hog prices are raised as demand strength carries from 2013 into 2014, but price gains will be limited by higher production. Broiler prices are higher as strong demand is expected to support prices in 2014. Turkey prices are down slightly for 2013 while 2014 is unchanged. Egg prices are raised for 2013 on relatively strong demand.

The 2013 milk production forecast is raised from last month based on growth in milk production to date. The milk production forecast for 2014 is unchanged from last month. Despite weaker forecast milk prices, forage supplies and feeding margins will likely continue to support modest gains in milk production. The fat-basis import forecast for 2013 is unchanged, but lowered on a skim-solid basis reflecting slower-than-expected imports of milk protein concentrates. The 2013 fat-basis export forecast is higher on continued robust exports of cheese. Skim-solid exports for 2013 are higher as nonfat dry milk (NDM) shipments are expected to remain strong. The United States has gained in export markets typically served by the European Union which has experienced a slowdown in production. Export forecasts for 2014 are unchanged. Fat and skim-solid basis ending stock forecasts for 2013 are raised as stocks of butter and cheese have remained large. Ending stock forecasts for 2014 are raised as well. Cheese and butter prices are forecast lower for 2013 on larger supplies. Prices for 2014 are lowered as the larger carry-in stocks overhang the market. The 2013 NDM price forecast is raised from last month on strong export demand, but the forecast for 2014 is unchanged. The whey price forecasts for both 2013 and 2014 are unchanged from last month. The Class III price forecasts are lowered from last month in line with lower product prices. The Class IV price forecast is unchanged for 2013 as lower butter prices are largely offset by higher NDM prices. However, the Class IV price is lowered for 2014, reflecting lower butter prices. The 2013 all milk price is forecast at $19.50 to $19.80 and the price for 2014 is $18.70 to $19.70 per cwt.