Corn+Soybean Digest

Brock Online Notes

USDA S/D Report Neutral For Prices

USDA made some adjustments to its U.S. corn and wheat usage estimates in Friday morning’s monthly supply/demand update, but didn’t touch its soybean balance sheet. The report is not likely to have much impact on futures prices, as none of USDA’s changes were big surprises. Traders at the Chicago Board of Trade called the report neutral to friendly for corn and wheat.

The USDA raised its U.S. corn estimate by 25 million bushels to 1.843 billion bushels, but the trade expected the increase. Trade estimates for the corn carryout averaged 1.853 billion bushels.

As expected, USDA cut its U.S. corn export projection due to a slow sales pace. USDA cut projected exports by 50 million bushels to 2 billion bushels.

The corn market may be somewhat encouraged that USDA boosted its estimate of corn use for ethanol production by 55 million bushels; however, other industrial use of corn was cut by 30 million bushels.

U.S. use of corn for ethanol production is now expected to rise by 18.4% over last year, but other industrial use is seen falling slightly.

The world corn supply/demand balance sheet is a bit negative as USDA raised expected world ending stocks by 3 million metric tons to 111.75 million tons due largely to higher production and lower exports.

USDA raised world corn production by over 4 million tons. Production estimates were raised for the Former Soviet Union, Russia, Canada, Mexico, the European Union and South Africa.

On the U.S. wheat supply/demand balance sheet, USDA cut its carryout projection by 15 million bushels to 553 million bushels. The new carryout figure was in line with trade expectations, which averaged 550 million bushels.

USDA raised its estimate of U.S. wheat exports by 25 million bushels to 1 billion bushels reflecting a better-than-expected sales pace through the first half of the marketing year.

Looking at the different wheat classes, projected exports were raised 10 billion bushels each for HRW wheat, HRS wheat and white wheat, while SRW wheat exports were cut 5 million bushels.

The increase in exports was partially offset by a 10-million-bushel cut in projected food usage.

On the world wheat supply/demand balance sheet, USDA raised projected ending stocks slightly as higher production estimates for Canada and the EU-25 offset a 1 million-metric-ton cut in Australia’s projected crop.

Overall world wheat production was raised 1.3 million tons to a record 118.26 million tons.

USDA made a small cut in its 2004-2005 world soybean ending stocks estimate to reflect lower beginning stocks in South America.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

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