This morning, Feb. 9, USDA released the latest WASDE report. Corn ending stocks are projected down 70 million bushels while corn used for ethanol is projected higher. Marketing year 2010-2011 corn prices are now projected at $5.05-5.75. Soybean ending stocks didn’t change from last month, still sitting at 140 million bushels. Prices stayed the same, too, in a range from $11.20 to $12.20. The complete report can be downloaded from the Web.
Corn
U.S. corn ending stocks for 2010-2011 are projected 70 million bushels lower this month with higher expected food, seed and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.
Rising corn prices have reduced spot margins relative to variable costs to breakeven levels in recent weeks; however, ethanol blender incentives remain in place and export demand prospects remain strong with sugar-based ethanol uncompetitive at current sugar prices. Corn costs for many ethanol producers and other end users may also be below spot values to date as a substantial portion of this year’s crop appears to have been forward priced. The continuing wide spread between reported monthly prices received by producers and substantially higher cash market bids can be explained by farmer deliveries of corn priced last year when prices were well below current levels.
Corn food, seed and industrial use is also projected higher for 2010-2011 due to rising prospects for production of sweeteners and starch. Corn used to produce high-fructose corn syrup (HFCS) is projected 15 million bushels higher reflecting strong shipments of the corn-based sweetener to Mexico. Demand for HFCS has grown in Mexico as sugar exports to the U.S. have increased. Corn used for starch is also raised 5 million bushels based on the improving outlook for industrial output in the U.S.
Ending corn stocks for 2010-2011 are projected at 675 million bushels. This month’s projections lower the stocks-to-use ratio to 5%, the same as in 1995-1996 – the last time ending stocks fell to multi-year lows. Corn prices rose sharply in spring and summer 1996 to ration usage ahead of the 1996 harvest. The 2010-2011 marketing-year average farm price is projected at $5.05-5.75/bu., up from $4.90-5.70/bu. last month.
Global 2010-2011 corn production is lowered 1.8 million tons with reductions for Argentina and Mexico. Argentina production is lowered 1.5 million tons as continued dryness through mid-January further reduced yield prospects in the country’s central growing areas. Mexico production is lowered 0.5 million tons on lower reported area. Partly offsetting are small increases for the Philippines and Zimbabwe. Corn, barley and rye production are all lowered slightly for Ukraine based on the latest government estimates.
Changes in global 2010-2011 coarse grain trade are mostly offsetting. Corn exports are reduced 1.5 million tons for Argentina with the smaller crop. Corn exports are raised 0.3 million tons for Canada and 0.1 million tons for Paraguay. Corn imports are reduced for South Korea and Mexico, but raised for EU-27. South Korea corn imports are reduced an additional 0.5 million tons this month as efforts to contain the recent outbreak of foot-and-mouth disease further reduce feed demand. Global corn consumption is raised slightly, mostly reflecting the increase in food, seed and industrial use in the U.S. Corn feeding is raised for EU-27, but lowered for Canada and South Korea. Global corn ending stocks for 2010-2011 are projected 4.5 million tons lower with most of the decrease in Brazil and the U.S.
U.S. soybean supply- and use-projections for 2010-2011 are unchanged this month, leaving ending stocks at 140 million bushels. Although soybean export shipments are only modestly ahead of last year’s pace, record sales through the first five months of the marketing year are expected to result in stronger gains in the second half of the marketing year.
Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave U.S. soybean crush well below 2009-2010 levels. Soybean oil exports are increased to 2.8 billion pounds reflecting continued strong export sales. Although soybean oil used for biodiesel during the first quarter of the marketing year was the lowest in six years, projected use for 2010-2011 is unchanged from last month as biodiesel production is expected to accelerate due to the 2011 mandate and the return of the $1/gal. blending credit.
The U.S. season-average soybean price range for 2010-2011 is projected at $11.20-12.20/bu., unchanged from last month. Soybean oil prices are forecast at 51-55¢/lb., up 3¢ on both ends of the range. Soybean meal prices are forecast at $340-380/short ton, up $20 on both ends of the range. Soybean product prices are raised this month based on strong year-to-date prices.
Global oilseed production for 2010-2011 is projected at 441.8 million tons, up 1.4 million tons from last month. Foreign production, projected at 341.3 million tons, accounts for all of the change. Brazil soybean production is forecast at a record 68.5 million tons, up 1 million tons from last month as timely rains in the southern producing area have raised yield prospects.
Paraguay soybean production is also projected higher this month. Argentina soybean production is projected at 49.5 million tons, down 1 million. Despite widespread rains since mid-January, the extended dry period during planting and early crop development reduced yield prospects. Other changes include higher soybean and sunflowerseed production for Ukraine, and increased peanut production for China. Palm production is raised for Indonesia and lowered for Malaysia.