U.S. wheat exports decreased according to December report
Brookings – There was a narrow range in market expectations for corn, soybean and wheat ending stocks prior to the release of the World Agricultural Supply and Demand Estimates (WASDE) report on Dec. 11.
The soybean and corn ending stocks estimates were in line with the market’s expectations, while the wheat ending stocks estimate was on the high side of the market’s expectation, said Lisa Elliott, SDSU Extension Commodity Marketing Specialist.
Elliott provides a synopsis of the Dec. 11 report.
U.S. corn balance remains unchanged
Prior to the report, market analysts’ average expectation for corn ending stocks was 663 million bushels. In the report, corn ending stocks remained unchanged from the November report at 647 million bushels, only slightly below expectation. The rest of the U.S. corn balance sheet also remained unchanged from the November report.
World corn production was increased by 9.4 million metric tons (mmt); however, this was offset by increased demand, leaving world corn ending stocks nearly unchanged at 117.6 million metric tons. Global production increases were shown for China (8 mmt) and Canada (1.46 mmt), while Argentina’s production was decreased (0.5 mmt).
Soybeans ending stocks down by 10 million bushels
Market analysts’ average expectation prior to the December WASDE report for soybean ending stocks was 130 million bushels with expectations ranging from 63 million bushels to 145 million bushels.
In the report, ending stocks were decreased by 10 million bushels from the November estimate, putting ending stocks at 130 million bushels. This is a 7 percent decrease in ending stocks of soybeans compared to the November WASDE estimate. Ending stocks were adjusted due to an increase in crush demand by 10 million bushels.
USDA also increased the implied projected soybean crush yield for oil from 11.43 pounds per bushel of soybeans to 11.65 pounds per bushel. This compares to the National Oilseed Processors Association (NOPA) soybean crush data that shows October oil crush yield at 11.76 pounds per bushel.
For the 2011-2012 marketing year, the USDA’s implied soybean crush yield for oil was 11.59 pounds per bushel, just slightly higher when compared with NOPA’s data of 11.53 pounds per bushel.
The USDA is projecting a higher soybean oil yield for this year. Slight modifications in yield can have large modifications in soybean products production.
As this year’s soybean crop continues to be processed, NOPA crush data will be important to monitor to see if the drought had any impact on the soybean oil content of this year’s soybeans.
The increased crush yield and projected increase of 10 million more bushels of soybeans increased soybean oil production by 460 million pounds to 18,290 million pounds. However, the increase in soybean oil supply is more than offset on the demand side with exports being increased (600 million pounds).
Prior to the WASDE report, soybean oil export commitments were at 109 percent of the WASDE’s annual export projection only eight weeks into the 2013-2014 marketing year.
USDA also decreased domestic food/feed/industrial consumption by 100 million pounds. This still resulted in soybean oil ending stocks being decreased slightly by 40 million pounds, a 2.6 percent decrease from the November report and a 41.8 percent decrease from last year.
The increase in the soybean crush figures, resulted in changes in the soybean meal balance sheet. Soybean meal production was increased by 200,000 short tons that were completely offset on the demand side with exports being increased (300,000 short tons) more than the decrease (100,000 short tons) in domestic disappearance. This resulted in ending stocks being unchanged from the November report at 300,000 short tons.
USDA is projecting an implied soybean meal yield at 47.58 lbs. per bushel of soybeans, while the NOPA October crush report indicated a yield of 47.27 pounds per bushel.
For the 2011-2012 marketing year, the USDA’s implied soybean meal yield was 48.18 pounds per bushel which is just slightly higher when compared with NOPA’s data of 47.91 pounds per bushel.The USDA is projecting a lower soybean meal yield for this year compared to last year.
Wheat ending stocks increase by 50 million bushels
Market analysts’ average expectation prior to the December WASDE report for wheat ending stocks was 712 million bushels with expectations ranging from 612 million bushels to 754 million bushels.
In the report, wheat ending stocks were increased by 50 million bushels from the November estimate, putting ending stocks at 754 million bushels. The ending stocks figure was at the high end of expectations. This is a 7 percent increase in ending stocks of wheat compared to the November WASDE estimate.
Ending stocks were increased due to exports being decreased by 50 million metric tons. This is the third straight WASDE report where exports have been decreased. Prior to the WASDE report, current marketing year export commitments were at 55.1 percent of the projected WASDE export pace, 27 weeks into the marketing year.
An examination of U.S. wheat by class shows varied changes in exports. Exports were decreased (45 million bushels) for hard winter wheat, decreased (5 million bushels) for hard spring wheat, decreased (10 million bushels) for soft red wheat, and increased (10 million bushels) for white wheat.
This resulted in ending stocks being increased for the wheat classes of hard winter, hard spring and soft red. White wheat ending stocks were decreased, while durum wheat remained unchanged.
Global wheat production was increased by 3.7 million metric tons due to production increases being made to China (2.6 mmt), Australia (1 mmt), and Canada (0.5 mmt), while a few other countries’ production numbers were adjusted slightly. China’s increase in production was offset by an increase to Chinese domestic usage, resulting in China’s ending stocks remaining nearly unchanged. World wheat ending stocks increased by 2.8 million metric tons.
Currently, market traders are weighing plentiful near-term stocks, and slow export demand, with potential production problems in major wheat growing regions for next year’s crop, such as U.S. and Russia.
The pace of wheat exports and the weather in the major wheat growing areas will largely dictate the price of wheat in the near term. Also, the release of the Quarterly Grain stocks report Jan. 11 will give another indication of the amount of wheat that has been utilized for livestock feeding.
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