Information about grain markets and info to help producers to market crops. See how various grain marketing strategies can effect ones average price. We will be posting various potential trade and option strategies along with marketing decisions made on our mock farms.
Wednesday, July 11, 2012
Morning Note from Country Hedging's Joel Fitch - USDA Report Recap
Below is from Country Hedging's Joel Fitch
It has a recap on the USDA report that was out this a.m.
Here is the quick and dirty from the report. The
expectations are located below.
Corn ending stocks were raised for old crop to 903 from 851
on a cut to exports of 50 mb. That is the only change for old crop.
It increases carrying by 50 mb. For new crop the USDA cut yield down to
146.0 and harvested acres to the expected 88.9 million acres. Feed and
residual was cut by 650 mb down to 4.8 bb still bigger than last year.
Ethanol was cut 100 mb to 4.900 bb and exports were cut down to 1.6 bb.
So they cut demand by 1,055 mb and ending stocks are 1,183 mb. These
demand numbers seem more realistic to me given the likely pricing of this
World ending stocks were dropped 21.7 mmt. US is the
only major change to production. Domestic feed, domestic use, and exports
Bean ending stocks were lowered by 5 mb because exports were
raised 5 mb. This is quite surprising and seems far too small a gain in
exports. Ending stocks for new crop fell 10 mb to 130 mb. Yield was
lowered to 40.5, but the acres jumped as the June 30th report
indicated – even though this number is too big due to the drought. Demand
was reduced. Crush was cut by 35 mb and exports were lowered by 115
mb. This is probably possible because of the high prices we are achieving
World ending stocks fall 3 mmt to 55.66 mmt. 12/13
World production is down 4 mmt from last month with the US being the only major
change. Demand categories fall here as well.
Wheat ending stocks were raised for 11/12 by 15 mb.
Minor changes. 12/13 ending stocks were cut to 664 down 30 mb from last
month. Supply change is negligible, but demand is altered feed is cut 20
mb and exports are raised 50 mb to 1.200 bb.
World wheat ending stocks are projected down 3 mmt to 182.44
as production falls 4 mmt in Russia, 2 mmt in Kazhakstan. Demand
projections fall slightly with feed, domestic use, and exports being cut.
By class wheat shows ending stocks tighter in 12/13 for HRW
at 266 mb, SRW at 143 mb, and white wheat at 60 mb. Ending stocks are
projected to loosen for 12/13 in HRS at 155 mb, and Durum at 40 mb. HRW
20% stocks/use, HRS 33% stocks/use, SRW 28.5% stocks/use, White 21% stocks/use,
Durum 37% stocks to use.
Overall, while these cuts seem realistic to the production
for corn as well as the demand side I think that the USDA is saying that these
prices are doing enough to ration demand at the current levels of estimated
production. Soybeans production is too high by 40 mb to 80 mb because of
the drought and double crop acreage. Demand is hard to know on
beans. Price typically rations demand, but with China being the only
major demand and the US being the only major supplier it is hard to guess what
happens. We should be back to looking at weather.