|Title:||United States wheat supply and demand in acreage and bushels for the period 2009 to 2010, and forecast for 2010 to 2011 and 2011 to 2012|
Start of full article - but without data
2009-XX 2010-XX 2010-XX USDA USDA Pro Farmer Planted (mil.acres) XX.X XX.X XX.X Harvested (mil.acres) XX.X XX.X XX.X Yield (bu./acre) XX.X XX.X XX.X Beginning Stocks (mil.bu.) XXX XXX XXX Production (mil.bu.) X,XXX X,XXX X,XXX Imports (mil.bu.) XXX XXX XXX Total Supply (mil.bu.) X,XXX X,XXX X,XXX
Food XXX XXX XXX Seed XX XX XX Feed/Residual XXX XXX XXX Total Domestic Use X,XXX X,XXX X,XXX Exports XXX X,XXX X,XXX Total Use X,XXX X,XXX X,XXX
Carryover XXX XXX XXX Carryover, Days' Supply XXX.X XXX.X XXX.X Stocks-To-Use Ratio XX.XX% XX.XX% XX.XX% Projected Avg. Price/bu. $X.XX $X.XX-X.XX $X.XX
2011-XX Pro Farmer projection:
Excellent Average Poor Planted (mil.acres) XX XX XX Harvested (mil.acres) XX.X XX.X XX.X Yield (bu./acre) XX XX XX Beginning Stocks (mil.bu.) XXX XXX XXX Production (mil.bu.) X,XXX X,XXX X,XXX Imports (mil.bu.) XXX XXX XXX Total Supply (mil.bu.) X,XXX X,XXX X,XXX
Food XXX XXX XXX Seed XX XX XX Feed/Residual XXX XXX XXX Total Domestic Use X,XXX X,XXX X,XXX Exports X,XXX X,XXX X,XXX Total Use X,XXX X,XXX X,XXX
Carryover XXX XXX XXX Carryover, Days' Supply XXX.X XXX.X XXX.X Stocks-To-Use Ratio XX.XX% XX.XX% XX.XX% Projected Avg. Price/bu. $X.XX $X.XX $X.XX
It's happening again. The corn market has put itself in a "can't-fail" situation. Instead of pushing prices high enough, early enough in the marketing year to slow down use and hold up inventories, the corn market's slow response to tightening supplies allowed expected stocks to drop too low.
In April, the United States Department of Agriculture (USDA) estimated XXXXXX corn carryover at XXX million bushels--just X% of expected use. But that's what is left. Shift your perspective of that number just a bit by sliding it from the bottom of the 2010-XX supply/demand balance sheet (see "Inside corn," right) to closer to the top of the 2011-XX table in the "beginning stocks" category.
Low corn carryover
New growing regions
If 2011-XX use is just steady with 2010-XX, we'll start the new marketing year on Sept. X, 2011 with just X% of expected use in the bin. That means XX% of demand (again, if use is steady with 2010-XX) must be met by the 2011 corn crop. That's why the corn market--from growers, to futures traders, to end-users and importers--can't fail in 2011.
The USDA's April Supply & Demand Report sent several messages and they were fairly easy to hear. For one thing, the USDA's number crunchers said they are borrowing from the future. They expect increased soft red winter (SRW) livestock feedings this summer to reduce demand for old-crop corn. And they expect increased corn plantings in the South to provide an early supply of2011-crop corn--early enough (with enough bushels) to help hold old-crop corn carryover up to XXX million bushels.
Borrowing from the future probably happens every year. In fact, we argue it happened at the end of the 2009-XX marketing year when early harvested corn moved back in time to inflate Sept. X, 2010 corn stocks to X.XXX billion bushels. But when analysts questioned the surprisingly high corn carryover, the USDA's National Ag Statistics Service (NASS) said there was no commingling of 2010-crop with the old-crop supply. This year, not only is the USDA saying there will be commingling of new- with old-crop supplies, it is counting on it.
Wheat feedings increase
For the first time since summer 1996, front-month corn futures in April traded above front-month wheat futures. In the cash market, corn's price premium was even bigger. There is no question wheat should work its way into feed rations. In the 1996-XX marketing year (1996-crop wheat fed to offset 1995-crop corn-for-feed use), wheat feed and residual use totaled XXX million bushels, up from XXX million in the previous year. This year, the USDA estimates wheat feed and residual use at XXX million and the agency's comments suggest 2011-XX wheat feed and residual use over XXX million to offset a portion of 2010-XX corn feedings.
Can Southern corn fill gap?
After denying it happened last fall, the USDA is counting on commingling of2011crop corn with old-crop stocks. (The NASS is adding a question in the Grain Stocks Report to address this issue.) Counting on it is dangerous. The USDA's March XX Prospective Plantings Report revealed producers expect to plant XXX,XXX more corn acres in the South (Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina and Tennessee). Yet it's questionable if corn can be harvested in Kentucky, Louisiana, Missouri and Tennessee in time to be used ahead of Sept. X, 2011 by the Southern hog and poultry industries. These "questionable" states account for XXX,XXX (about XX%) of the XXX,XXX-acre increase in Southern corn acres. That leaves about XX% of the increase (XXX,XXX acres) potentially in position to supply new-crop corn to the old-crop marketing year.
Some 2011-crop corn will slip back into the 2010-XX marketing year, but counting on it to hold old-crop carryover up at XXX million bushels is dangerous.
All marketing years are tied together, but the web the USDA has woven around the last three years is unusual. When released, these reports moved the grain markets and are impacting grain trade today:
June X, 2010 Quarterly Grain Stocks Report: Corn supplies were XXX million bushels below expectations, prompting speculation the USDA had overestimated the 2009 corn crop. While that may have happened, it's more likely corn prices had fallen too far and demand had ramped up too fast. With use running wild, June X, 2010 corn stocks were dragged lower.
Sept. X, 2010 Quarterly Grain Stocks Report: The bushels lost in June were found in September, forcing 2009-XX corn carryover up to X.XXX billion bushels --about XXX million bushels above expectations. That's the report that triggered widespread speculation early harvested 2010-crop corn had slipped "back in time" to build corn supplies. The USDA, however, said there was no commingling of 2010-crop corn with 2009-crop supplies.
October 2010 S&D Report: The World Board, responsible for S&D estimates, said there was commingling. It increased 2010-XX corn feed and residual use XXX million bushels to partially account for 2010-crop corn that slipped back in time. (While this increased use, it was an adjustment for lower supply.)
Crop Production Reports: The 2010 corn crop was good quality, but yields were below trendline. That was a consistent anchor on 2010-XX corn carryover throughout fall and winter 2010 and into spring 2011.
December X, 2010 Quarterly Grain Stocks Report: Surprisingly, few surprises.
March X, 2011 Quarterly Grain Stocks Report: Corn stocks were about XXX million bushels below expectations. That signaled stronger-than-expected use in the first half of the 2010-XX marketing year--or an overestimated 2010 corn crop.
March XX, 2011 Prospective Plantings Report: Corn planting intentions came in bigger than expected on the promise of more acres in "fringe" corn production areas--primarily the South and the Northwest corn belt.
April S&D Report: Traders expected corn carryover to drop below XXX million bushels on stronger-than-expected use. Instead, the USDA's World Board moved XX million bushels from feed and residual to ethanol use and borrowed SRW wheat and corn from the future to hold up old-crop corn carryover.
Tie to 2012-XX marketing year: Borrowing from the future is "okay" only if the rest of the U.S. corn crop lives up to expectations. The South isn't the worry, it's the Dakotas. North Dakota corn acres are expected up XXX,XXX acres; South Dakota corn planting intentions are up XXX,XXX acres from a year ago. If all of those X.X million acres don't get planted to corn, the 2011-XX marketing year will need the bushels from "an early Southern harvest" just as much as the 2010-XX marketing year needs those bushels. If2011 plantings fall short of intentions (first domino falls), the USDA will be forced to borrow from the 2012 crop (there goes another one) to keep corn in the 2011-XX pipeline. We'll once again be borrowing from a future that can't afford to give up any supply.