Corn carryover decreased in USDA report

Feb 10, 2012
by WLJ

USDA released its February Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports last Thursday, with analysts calling it neutral to bullish for corn and neutral to bearish for wheat and beans.

The report showed a lower U.S. 2011 corn carryout, decreased by 45 million bushels to 801 million bushels, with much of it attributed to a 50 million-bushel increase in exports.

USDA also cut Argentina’s corn production from its January estimate by 4 million metric tons (mmt), dropping overall production to 22 mmt.

Brazil’s corn production was unchanged.

On Feb. 9, opening trade for March corn future was up 7 cents, and the March soybean future was up 13 cents, according to the website.

U.S. ending stocks

USDA left soybean ending stocks unchanged from the January estimate at 275 million bushels.

Domestic wheat stocks came in toward the low end of pre-report estimates, with an estimated 845 million bushels on hand.

“Domestic ending stocks numbers for corn, beans and wheat all came within expectations falling mostly in the neutral category,” DTN Analyst John Sanow said. “Corn fell 45 mb (50 mb increase in exports, 5 mb increase in imports) from January to 801 mb. In the near-term, this could be considered neutral-to-bullish. From a long-term outlook, though, the situation grew more bullish as stocks to use shrank to 6.3 percent, drawing closer to the tightest level in history at 5 percent in 1995-1996.

“Ending stocks for soybeans were left unchanged at 275 mb against expectations for a slight decrease, meaning stocks to use is left unchanged at 9.1 percent. The wheat number could be considered neutral to bullish as the reported 845 mb came in on the low side of expectations at 845 mb tied to a 25 mb increase in exports.”

World ending stocks

Global ending stocks of corn were whittled down to 125.35 mmt from January’s estimate of 128.14 mmt.

Soybean supplies were shaved down to 60.28 mmt from last month’s estimate of 63.43.

Wheat ending stocks grew to 213.1 mmt globally, an increase of about 3 mmt.

Wheat is reportsĀ“ bearish surprise

The global numbers were neutral to bullish for beans and corn, and bearish for wheat, Sanow said.

“As expected, global ending stocks fell for both corn and beans on a drop in production for Brazil and Argentina,” Sanow said. “Ending stocks to use fell to 14.4 percent for corn, representing the tightest level since the 1973-1974 marketing year. The number fell to 23.4 percent for beans, which is nearing the 2007-2008 marketing year when 22.3 percent was seen. These numbers could also still be overstated as local estimates continue to come in below the revised numbers.

“If there was a bearish surprise in the report, it was in wheat. Ending stocks rose on increased production in India, Kazakhstan and Morocco, while Europe, Ukraine and Russia were all left unchanged. Traders were expecting a slight decrease, while the market was calling for a large reduction due to the significant weakening of the carry in the Chicago futures spreads recently.”

World production

USDA held Brazilian corn production level at 61 mmt. The country’s soybean production was cut by 2 mmt to 72 mmt.

Argentina’s corn crop estimate was lowered by 4 mmt. Its soybean crop is also expected to be smaller at 48 mmt, a 2.5 mmt decrease.

Wheat production in the former Soviet Union and the European Union (EU) were left relatively unchanged. EU production was held steady at 137.5 mmt while production in former Soviet Union countries was actually increased by 0.2 mmt.