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USDA WASDE report lowers corn supply

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On Feb. 10, USDA released the latest World Agriculture Supply and Demand Estimates (WASDE) Report, which showed slight decrease in the expected U.S. corn ending stocks for 2013-14, compared to the January estimates. The projected 2013-14 corn ending stocks are now estimated at 1.48 billion bushels, as compared to 1.63 billion bushels in the January Report. By comparison, corn ending stocks were only 821 million bushels at the end of the 2012-13 marketing year, and 989 million bushels at the end of the 2011-12 marketing year. The all important corn “stocks-to-use” ratio for 2013-14 is now estimated to be near 11.1 percent by the end of the current marketing year, as compared to a stocks-to-use ratio of only 7.4 percent for the 2012-13 marketing year.

The decrease in corn ending stocks projected in the Feb. 10 report came in the form of an expected increase of 150 million bushels in corn exports for 2013-14. The estimated 1.6 billion bushels of U.S. corn exports for 2013-14 would be a nice rebound from the 2012-13 U.S. corn export level of 731 million bushels. The 2013-14 levels are more in line with U.S. corn export levels of over 1.5 billion bushels for 2011-12, and over 1.8 billion bushels in 2010-11. Export demand for U.S. corn was greatly reduced in 2012-13, due to very high price levels for U.S. corn, following the 2012 drought. The latest WADSE Report held the expected corn usage for ethanol production in 2013-14 at 5 billion bushels, and for feed usage at 5.3 billion bushels, which are the same levels as the January Report. Overall corn usage for the 2013-14 marketing year is estimated at 13.3 billion bushels, compared to only 11.1 billion bushels in 2012-13, and 12.5 billion bushels in 2011-12.

USDA is currently estimating U.S. on-farm corn prices for 2013-14 marketing year in a range of $4.20-4.80 per bushel, or and average of $4.50 per bushel, which is an increase of 10¢ per bushel from an average of $4.40 per bushel in the January Report. The 2013-14 marketing year is for corn raised in 2013, and runs from September 1, 2013 through August 31, 2014. The estimated average U.S. on-farm market price for corn for the 2013-14 marketing year is far lower than the U.S. average corn price of $6.89 per bushel for 2012-13 marketing year, and is also well below the $6.22 per bushel average price for 2011-12, or $5.18 per bushel for the 2010-11.

The WASDE Report released by USDA on Feb. 10 left the expected U.S. soybean carryover at 150 million bushels, which is the same as the January estimate. This compares to soybean ending stocks of 141 million bushels for 2012-13, 169 million bushels for 2011-12, and 215 million bushels for 2010-11. The estimated total soybean usage for 2013-14 is about 3.31 billion bushels, which is up from 3.10 billion bushels in 2012-13, and 3.15 billion bushels in 2011-12. Soybean exports for 2012-13 are estimated at 1.51 billion bushels, compared to 1.32 billion bushels in 2012-13, and 1.36 billion bushels in 2011-12. The soybean “stocks-to-use” ratio for 2013-14 remains very tight at 4.5%, which is similar to a year ago.

USDA is now estimating on-farm soybean market prices for the 2013-14 marketing year in a range of $11.95-13.45 per bushel, or an average of $12.70 per bushel, which is an increase of $.20 per bushel from the January estimate. By comparison, the average U.S. on-farm market price for soybeans for the 2012-13 marketing year was $14.40 per bushel, after being $12.50 per bushel for the 2011-12, and $11.30 per bushel for the 2010-11. Most grain marketing analysts expect soybean market prices for the remaining 2013 crop year to stay fairly stable in the next few months, with a very favorable local basis situation in many areas of the U.S.

The latest USDA Report was viewed as being fairly “neutral” by most grain marketing analysts, with very little change seen in the overall fundamentals of the corn and soybean markets. The fact that total corn and soybean usage levels for the 2013-14 marketing year are expected to far exceed 2012-13 usage levels, and even exceed 2011-12 usage levels, is viewed as “good news.” Total usage of both corn and soybeans for 2012-13 were reduced by lower supplies and very high price levels, following the 2012 drought. It appears that corn and soybean demand levels are on pace to return to the levels that existed prior to last 2-3 years. In the short-term, this should help stabilize the rapid decline in the corn and soybean markets, which has been occurring in recent months.

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on Feb 20, 2014

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