Bullish USDA Supply and Demand Report

 

The monthly USDA Supply and Demand Report released on Nov. 9 was fairly bullish for corn and soybean market prices in the coming months. USDA is now estimating 2010-2011 U.S. corn carryover stocks at 827 million bushels, which compares to 900 million bushels in October, and represents a decrease of 37% from the Aug. 1 carryover estimate of 1.312 billion bushels. The projected 2010-2011 corn carryover would be less than 1 billion bushels for the first time in recent history, and would be the lowest since 1995-1996.

The projected 2010-2011 carryover represents only about 6.2% of the estimated total usage for the year, which is quite low. This percentage was only exceeded by 1995-1996 when the percentage of projected carryover to total usage dropped to 5%. The very low projected corn carryover stocks for 2010-2011 were somewhat mitigated, as USDA lowered expected corn usage for feed by 100 million bushels and exports by 50 million bushels in the November estimate, compared to a month earlier. This helped offset the anticipated lower 2010 U.S. corn production, as well as increased corn usage for ethanol production in the coming year.

Based on the November USDA report, soybean ending stocks for 2010-2011 are expected to be 185 million bushels, which is down 30% from the October estimate of 265 million bushels. Global demand for soybeans and other oilseeds is quite strong. USDA now estimates the total U.S. soybean exports for the current year at a record 1.57 billion bushels, which is an increase of 50 million bushels from last month. Most of the increase is due to added soybean sales to China, which accounts for approximately 70% of U.S. soybean exports. The combination of increased soybean exports and a slight decline in estimated 2010 production, lead to the sharp decrease in the projected soybean carryover bushels. The soybean ending stocks for 2010-2011 are now estimated at 20 days of usage, which is quite low, and could lead to some localized shortages of soybeans in the coming year. 

USDA is currently estimating the U.S average cash corn price for 2010-2011 in a range of $4.80-5.60/bu., or an average of $5.20/bu., which is an increase of 20¢/bu. from the October estimated average price of $5. The current USDA corn price estimate is significantly higher than the September average corn price estimate of $4.40/bu. or the August projection of $3.80. USDA is projecting the U.S. average soybean price for 2010-2011 in a range of $10.70-12.20/bu., resulting in an average soybean price of $11.45/bu. – an increase of 70¢/bu. compared to the $10.75 estimated price in October, and an estimated $9.90 in September.

 

Expected Crop Yields Adjusted

The USDA report released on Nov. 9 decreased the expected U.S. corn production for 2010 to 12.54 billion bushels.  This compares to USDA 2010 corn production estimates of 12.66 billion bushels in October, 13.16 billion bushels in September and 13.36 billion bushels in August. Total U.S. corn production was 13.1 billion bushels in 2009 and 12.1 billion bushels in 2008. USDA is estimating that the 2010 average corn yield in the U.S. will be 154.3 bu./acre, down slightly from the September yield estimate of 155.8 bu., and well below the record U.S. average corn yield of 164.7 bu. in 2009. The recent USDA report estimated total soybean production in 2010 at 3.37 billion bushels, which is a slight decrease from the 3.41 billion bushel estimate in October. The average U.S. soybean yield for 2010 is now estimated at 43.9 bu./acre – just shy of the record U.S. soybean yield of 44.0 bu. in 2009. 

Based on the Nov. 9 report, USDA is estimating the 2010 corn yield in Minnesota at 175 bu./acre, which is the highest among major corn producing states in the U.S. and is just above the 2009 record corn yield of 174 bu. (also set in 2005). USDA lowered the expected 2010 average corn yield in Iowa to 167 bu., compared to the September estimate of 179 bu., leaving the expected 2010 yield well below the state record corn yield of 182 bu. in 2008. Illinois is now projected to have a 2010 average corn yield of 159 bu./acre – a reduction of 17 bu. from the 174 bu. estimated in September. Corn yields for 2010 for Indiana are now estimated at 160 bu., a decline of 10 bu. from the September estimate, while 2010 Nebraska corn yields are estimated at 166 bu., also down 13 bu. compared to the September estimate.

The Nov. 9 USDA report estimated the 2010 Minnesota soybean yield at 44 bu./acre –a decrease of 1 bu. from the October report and just below the state record soybean yield of 45 bu. set in 2005. The projected 2010 soybean yield is 4 bu. higher than the 2009 state average soybean yield of 40 bu. The projected 2010 Iowa soybean yield is estimated at a record 52 bu./acre, and compares to a final average yield of 51 bu. in 2009. Other projected state soybean yields for 2010 are Illinois at 52 bu., Indiana at 50 bu. and Nebraska at 53 bu. 

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected]

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