CME: Highlights of Latest WASDE Report

by 5m Editor
11 March 2011, at 4:56am

US - USDA’s March World Agriculture Supply and Demand Estimates (WASDE) report, released Thursday morning contained hardly any changes to projected US supply and demand estimates for corn, soybeans and wheat but did contain some changes to world production and usage estimates.

Some highlights by commodity are:

  • Corn—No changes to US projected supply or usage at this point. That was more-or-less expected and is par for the course in March, a month that sees the very important Planting Intentions and mid-year Grain Stocks report released on its last day. USDA did narrow its predicted range for the average farm price by 10 cents/bu. on each end — to $5.15 to $5.65 per bushel. World corn production was left virtually unchanged. The only major country output changes were for Brazil (+3.9 per cent to 53 million metric tons (MMT)) and Mexico (-8.3 per cent to 22 MMT — reflecting the freeze that damaged corn crops in northern Mexico)

  • Wheat—The only change for 2010-11 wheat projections was a 25 million bushel reduction of exports. That reduction fell to the bottom of the balance sheet as an increase in projected ending stocks, now pegged at 843 million bushels or 34.4 per cent of total usage. Those numbers compare to 976 million bushels and 48.4 per cent in 2009-10. The big year-on-year change is still for exports which are now forecast to increase from 881 million bushels last year to 1275 million bushels this year, driven primarily by the short 2010 crops in Russia, Ukraine and Kazakhstan. World wheat production was increased 0.3 per cent to 647.6 MMT, still 35 MMT lower than last year’s output. The increase in world supply was due to increases for Argentina (+7.1 per cent from Feb to 15 MMT—-that is 36 per cent larger than last year) and Australia (up 4 per cent from February to 26 MMT —compared to only 21.9MMT last year).

  • Soybeans — No changes were made to the February estimates for soybeans. Soyoil production was increase by 35 million pounds, reflecting slightly higher crush yields since crushings remained steady with February’s forecast. World soybean production for ‘10-’11 was increase by 0.9 per centdue to larger projected crops in Brasil (+1.4 per cent from Feb, 167.8 MMT) and China (+5.6 per cent from Feb, 15.2 MMT). 200 million pounds of soyoil were shifted from biodiesel (methyl ester in the WASDE table) usage to other domestic usage and exports were increased by 200 million pounds. The net result was a 165 million pound reduction in projected year-end soyoil stocks. USDA raised both ends of its forecast price range by 0.5 cents/lb. The range is now 51.5 to 55.5 cents/lb. Bean meal production and exports were increased by 50,000 tons, leaving carryout stocks unchanged. USDA reduced the top of its forecast price range by $10/ton. The range is now $340 to $370/ton.

  • Cotton — worthy of our attention due to its potential impact on soybean acres. USDA made no changes in its projected 2010-11 US balance sheet but narrowed the projected farm price range by 1 cent/lb on each end. It now stands at 80-83 cents/lb. For reference — May and July cotton futures closed Thursday at $2.025/lb. and $1.915/lb., respectively. New crop October futures closed at $1.55/lb. Dec closed at $1.27/lb. Several small changes were made in USDA’s world cotton supply and demand estimates with the net result of a 1 per cent reduction in projected year-end stocks. Those stocks, at 42.33 million bales (480-lbs.) compare to 43.84 million bales last year but those compare to 60.52 million bales at the end of the ‘08-’09 crop year—-thus much higher prices.
Was the sharp drop in cattle weights the week of February 19 the first indication of tightening supplies?

That is a question worthy of consideration at this point. Higher placements last fall have supported higher slaughter rates but at some point fed supplies will get tight and feedlots/packers will have to dig a little deeper into the supply, drawing weights downward. One must look, however, a little deeper at the data to draw any conclusion yet.

Steer weights dropped 11 pounds that week while heifer weights dropped 9 pounds. The next week, though, heifer weights gained 7 pounds while steer weights dropped another 4 pounds to 830. Note that all of these data are actual, not estimated, weights from AMS. A key driver of the decline in cattle weights, though, was a drop from 625 to 616 and then 610 pounds in the average weight of cows slaughtered the week of Feb 12, 19 and 26, respectively.

USDA does not provide separate weights for beef and dairy cows but we think a major contributor to that decline was an increase in the proportion of cow slaughter accounted for by thinner-fleshed dairy cows.