World Ag Supply and Demand Report Recap

USDA released their monthly World Agricultural Supply and Demand Estimates report (WASDE) early this morning (May 10).  The report is the first to highlight the new -2012- crop.  The report revealed more corn and cotton available than analysts expected, while soybeans and wheat came in tighter than expected.  No publicly available pre-report expectations were made with respect to rice, but estimates were slightly lower than the April report.  Markets reacted accordingly as corn and cotton were down, while rice, soybeans, and wheat moved higher.

Corn estimates for the old crop were lowered 50 million bushles (mbu) on lighter corn for livestock feed use.  Corn for feed has been slipping lately as feeders have switched from corn to wheat and other small grains.  No other changes were made and thus ending stocks were raised to 851 million bushels.  The highest ending stocks pre-report estimate was 801 mbu – the same as reported in April.  So, the report was bearish on old crop.

New crop projections used the same acreage value from the March 30 Prospective Plantings report and harvested acres use the historical average abandonment rate.  Expected harvested acres are 89.1 million and yield is projected at 166.0 bu/ac.  The yield number is above trend yield, of about 162 bu/ac, due to the fast start to the planting season.  If realized, this would put production at 14.79 billion bushels (bbu), a record crop.  The increased production should eleviate the tight supplies as is shown in the ending stocks number for the 2012/13 marketing year at 1.881 bbu – this would be a 121% increase over the 851 mbu ending stock estimate for the 2011/12 year.

Old crop cotton ending stocks were unchanged from the April WADSE; however, offsetting adjustments were made.  Yield was raised from 766 lbs/ac to 790 lbs/ac.  This was offset by a smaller harvested acreage of, from 9.75 million to 9.46.  Expectations on old crop cotton were for production, exports and ending stocks to be 15.51, 11.29, and 3.37 million bales vesus 15.57, 11.4, and 3.4 reported.

New crop cotton production, exports and ending stocks – reported for the first time in this May report – were expected to be be 16.67, 11.83, and 4.52 million bales, respectively.  The WASDE reported these at 17.00, 12.00, and 4.90 million bales, respectively.  Therefore, the new numbers were above expectations.  Cotton harvested acres are projected at 10.5 million acres and yield is at 777 lba/ac – about 50 lbs/ac below trend.  Together these would put production at the aforementioned 17 million bales.

Soybean crushings and exports were increased for the old crop thus pushing demand up.  Crushings were reported at 1.645 billion bushels versus 1.63 last month, while exports were raised from 1.29 to 1.315.  Analysts expected 2011/12 soybean ending stocks to be 221 million bushels (mbu) and the report came in slightly less than that at 210 (compared to 250 in April’s report).

New crop soybean estimates revealed production projected at 3.205 bbu based on 73 million harvested acres and 43.9 bu/ac yield (about even with trend yield).  Total soybean use is expected to be 3.285 bbu thus chipping away at stocks which are projected at 145 million bushels.  The ending stocks estimate was lower than pre-report estimates of 170 mbu.