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Wheat Unchanged in USDA Report; Corn is the Headliner

Posted Feb 9, 2011 at 09:15am by Bill Spiegel

USDA's World Agriculture Supply and Demand report, released Feb. 9, gives a quick look at the world grain trade. The latest report shows no change in U.S. wheat supply, use and ending stock projections for 2010-11, although there are a few adjustments by wheat class:

  • Exports of Hard Red Winter (HRW) and White wheat are each projected 10 million bushels higher. 
  • Hard Red Spring (HRS) wheat exports are projected 20 million bushels lower. 
  • Domestic use is projected 10 million bushels lower for HRW and 10 million bushel higher for HRS. 
  • The marketing-year average price received by producers is projected at $5.60 to $5.80 per bushel, up 10 cents on the lower end of the range. Continued gains in cash and futures prices boost the farm price outlook for the remainder the marketing year.

Global 2010/11 wheat supplies are reduced slightly this month reflecting a 0.4-million-ton downward revision to Ukraine production based on the latest government estimates. Global wheat trade is reduced slightly with small reductions in imports for Syria, Iraq, and Pakistan, mostly offset by an increase for Bangladesh. Exports are lowered for EU-27 and Ukraine, but raised for Canada and Pakistan. These changes largely reflect the pace of sales and shipments reported to date.

Global 2010/11 wheat consumption is nearly unchanged with higher expected food use offset by reduced wheat feeding. Food, seed, and industrial use is raised 0.5 million tons each for Argentina and Bangladesh, but lowered 0.2 million tons for Canada.

Corn is another story altogether.

U.S. corn ending stocks for 2010111 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 2010/11 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 United States have increased. Corn used for starch is also raised 5 million bushels based on the improving outlook for industrial output in the United States.

Ending corn stocks for 2010/11 are projected at 675 million bushels. This month's projections lower the stocks-to-use ratio to 5.0 percent, the same as in 1995/96—the last time ending stocks fell to multi-year lows. Corn prices rose sharply in the spring and summer of 2006 to ration usage ahead of the 2006 harvest. The 2010/11 marketing-year average farm price is projected at $5.05 to $5.75 per bushel, up from $4.90 to $5.70 per bushel last month.

Global 2010/11 coarse grain supplies are projected 4.4 million tons lower this month with smaller beginning stocks and production. Coarse grain beginning stocks are reduced 2.4 million tons mostly reflecting lower corn carryin in Brazil and lower barley carryin in Saudi Arabia. Higher 2009/10 corn exports for Brazil and lower 2009/10 barley imports for Saudi Arabia drive these changes in 2010/11 supplies. Global 2010/11 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.

Little change in U.S. soybean supply and use projections.

Ending stocks are pegged at 140 million bushels. Record sales occurred in the first five months of the marketing season. Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave U.S. soybean crush well-below 2009/10 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 6 years, projected use for 2010/11 is unchanged from last month as biodiesel production is expected to accelerate due to the 2011 mandate and the return of the $1.00 per gallon blending credit.

Global oilseed production for 2010/11 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 1.0 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.

The entire report is online at:

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