Supply and Demand Report Recap

On Thursday the United States Department of Agriculture released its monthly World Agricultural Supply and Demand report (WASDE).  The June report was the second that revealed projections regarding the current growing season for crops.  The report continued the ongoing theme of tight supplies for crops.  However, projections for corn and soybeans went in opposite directions both in the numbers reported and the reasoning behind them.  With corn, ending stocks for the 2011/12 marketing year were lowered to 645 million bushels (mb) compared to 900 mb in last month’s projection – the first for the 2011/12 marketing year.  The reasoning behind the drop is the delayed progress of the 2011 corn crop for the majority of the corn acres.  Yield per acre for corn was unchanged since there is a lot of time for the crop actually in the ground to recover, but the number of acres were lowered as it is expected that acres will be lost due to flooding of the Mississippi, Missouri, and Ohio rivers.  The number of these lost acres that will be switched to beans, however, is still uncertain and as such soybeans acres and yield were left unchanged from last month’s projections for the 2011/12 marketing year.  The increase in ending stocks for 2011/12 soybeans were a result of increased carry-in from 2010/11 and from lower exports projected for 2011/12.  Ending stocks for soybeans in the 2011/12 year were projected at 190 mb compared to 160 in May’s report.

Cotton projections revealed the concern of lost acres due to the extreme drought conditions present in the Southern Plains.  The direct implications were evident in that planted acres were unchanged but abandonment is expected to be higher resulting in less acres harvested – currently projected at 10.2 million versus 10.8 last month.  The ending stocks for the 2011/12 marketing year were unchanged though, at 2.5 million bales, as more stocks are expected to be carried over from the current marketing year and exports were reduced slightly given the fact that cancelations are starting to crop up as a result of the higher price of cotton, timid demand and a rising U.S. dollar.