August 2012 USDA World Agriculture Supply and Demand Estimates
- ’11/’12 Corn –Slightly Bearish
- Exports and ethanol were reduced 50 million bushels each.
- Ending stocks was estimated at 1,021 million bushels or 29.8 days of usage which was above the private estimate.
- ’12/’13 Corn– Slightly Bullish
- Total production was revised sharply lower by an additional 2.19 billion bushels on a 23 bushel/acre reduction in yield along with 1.5 million less acres harvested. This was slightly below the average of the wide range of private estimates.
- Feed and residual usage was revised down sharply by 725 million bushels based on higher prices rationing demand.
- Ethanol grind was also 400 million bushels lower as declining production is expected to continue given very poor margins on the curve.
- Exports are off 300 million bushels leaving them projected at the lowest level since 1986.
- Ending stocks were 650 million bushels or 21.1 days of use which is near the minimum acceptable level to bridge between the two crop years.
- The projected estimates were in line with market expectations so response was mute. The question going forward will be, “Are current prices at levels that will ration demand to those projections?”
- ’11/’12 Soybeans– Neutral
- Exports and crush were revised higher by a total of 25 million bushels.
- Ending stocks was estimated at an extremely tight 145 million bushels.
- ’12/’13 Soybeans– Very Bullish
- Yield was reduced to 36.1 bushels per acre along with a 700k reduction in acres harvested leaving total production down nearly 12% from last month at 2.69 billion bushels.
- Exports were reduced an enormous 260 million bushels and crush is projected 95 million bushels lower.
- Ending stocks came in at a very tight 115 million bushels or 15.3 days of use which again is the bare minimum level to carry over from one crop cycle to the next.
- The pace of new crop export sales and limited supply in South America will make it very difficult to ration exports to current projected levels. Look for China to release a large portion of its reported 150 million bushel government reserve over the coming months.
- Other Markets – Neutral
- Brazil and Chinese production and ending stocks of corn were projected higher but this was mostly offset by lower output from the EU, FSU, and a mix of other countries.
- Increased wheat feeding is expected to curtail world feed demand for corn along with rationing occurring in livestock from higher feed prices.
- Meat production is forecasted higher in 2012 as cattle, hogs, and poultry on feed are finished along with higher than average breeding animal slaughter. However, this is expected to curtail 2013 production for pork and beef.