December Supply and Demand Report Recap

by: Brian Williams and John Michael Riley

Estimated U.S. production and acreage for corn, soybeans, and wheat in the December USDA report remain unchanged over the November estimates. U.S. soybean yields for 2012 are estimated at 39.3 bushels/acre, down from 2011 but unchanged from last month. U.S. soybean production is estimated at 2.97 billion bushels this year. Global soybean stocks are projected to be 10 million bushels lower than last month’s estimate at 130 million bushels as a result of increased foreign demand for soybean products.

This year’s corn yield is estimated at 122.3 bushels/acre compared to last year’s yield of 147.2 bushels/acre. Some traders believed the USDA would adjust the harvested acres for cord downward by as much as 1 million acres, but the estimated remained at 87.7 million acres as reported in November. Global corn stocks are projected to be 7 million tons higher with most of the increase attributed to an increase in Chinese production.

U.S. wheat production is estimated at 1.65 billion bushels, up from last year. Global wheat stocks are projected to be 2.8 million tons higher on higher than expected production China. U.S. ending stocks for wheat are 50 million bushels higher, mostly on lower exports.

Cotton production was lowered this month compared to November due to a reduction in expected cotton yield. The national average yield is currently pegged at 793 pounds per acre compared to 802 last month. Only three states saw their upland cotton yield estimate reduced (Arizona, Mississippi, and Texas). Texas’ lion share of the production is shown in that the national yield was pulled down 9 pound per acre with only three states showing a decline. This yield coupled with 10.44 million acres results in production of 17.26 million bales. Domestic use of cotton was unchanged from last month at 3.4 million bales, but exports were adjusted higher, from 11.6 to 11.8 million bales, following the recent increases from the weekly export sales reports. The jump in exports is noticeable for both U.S. and global cotton. China’s economy, at the moment, appears to be rebounding and this is good news for cotton use and prices. Ending stocks of cotton were lowered 400,000 bales to reflect the smaller production and higher exports. This puts the stocks-to-use ratio at 35.5% compared to 38.7% for last month but higher than last year’s 22.3%.

Season average prices have been adjusted down for all major grain crops. The average farm price for wheat is 10 cents lower with a range of $7.70 to $8.30 per bushel. Average corn prices were lowered 20 cents with a range of $6.80 to $8.00 per bushel and soybean prices were lowered 35 cents to $13.55 to $15.55 per bushel. Projected season average cotton price was unchanged,  but tightened on both ends of the range, now at 65 to 71 cents per pound.

Supply and Demand Changes:

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