Wednesday, January 13, 2010
USDA’s Final 2009 Crop Report: Facts Behind The Surprises.
A strong seatbelt and an industrial-grade airbag were not sufficient today for the market to absorb the shock of USDA’s “Almost” Final Report on the 2009 crop. Estimates of crop size that declined in December were increased, and increased well above what the trade was expecting, all based on large yields. But harvest delays were noted by the USDA crop statisticians, and they will continue their work on the 2009 crop until nearly time to plant the 2010 crop. There was a lot of information and a lot of implications in the January 12 Crop Report.USDA released its Annual Crop Production Report, Supply-Demand Report, Quarterly Grain Stocks Report, and Wheat Seedings Reports on January 12.
Corn production:
USDA’s decision to estimate the corn production figure at 13.151 billion bushels, which was well above trade estimates and the November estimate of 12.92 billion, was based largely on a nearly four bushel increase in the national average yield. It jumped to 165.2 bushels per acre from 162.9 bushels in November and compares to the previous record high of 160.3 bushels set in 2004.
The increased production was also the result of increased harvested acreage, which was raised 300 thousand acres from the December estimate. USDA raised its estimate for corn being fed to livestock by 150 million bushels to 5.550 billion. Corn being used for ethanol was held steady at 4.2 billion bushels. With total consumption at 13.07 billion bushels, USDA raised the carryout to 1.764 billion, However, because of higher usage, stocks as a percentage of use are down year-to-year at 13.5% compared with 13.9% for 2008/09. That may have been the reason for USDA’s addition of 15 cents to the estimated price range, which is now $3.40 to $4.00.
All Cornbelt states, except for Missouri recorded a record high number of ears per acre. MN topped the group with 30,800 ears per acre, followed by IA at 29,200, and IL at 28,900.
Harvest began late with only 25% of the corn crop harvested by November 1, and by December 20 still 5% of the national crop remained in the field with significant acreage in ND, SD, and WI. Due to unharvested acreage the National Agricultural Statistics Service may release updated data for corn and soybeans in the March 10 Crop Production Report. NASS says there was significant unharvested acreage of corn in IL, MI, MN, ND, SD and WI; and the unharvested area and expected production were included in the January 12 totals. NASS will re-contact respondents who previously reported acreage not yet harvested in these states, and if the newly collected data justifies any changes, NASS will update the January 12 estimates in the March 10 report, except for SD and ND. NASS plans to re-interview producers there at a later time.
Soybean production:
Production estimates for 2009 are a record of 3.361 billion bushels, helped by a record high yield of 44 bushels per acre, more than 4 bushels higher than last year. The harvested area of 76.4 million acres is also a record high amount. USDA did cut the estimate of harvested acres by 200 thousand. Regarding use, USDA raised the crush by 15 million bushels to 1.710 billion, and raised the estimate of exports by 35 million to 1.375 billion bushels. With total consumption projected at 3.262 billion, that leaves 245 million bushels in the carryout, down 10 million from the December estimate. USDA increased the price range for beans by 15 cents to $8.90 to $10.40.
The increased yield was a function of higher pod counts in many states, says NASS. They were higher than last year in eight of the 11 states measured, and up by 25% in MO and by 10% in SD. However, IL and IN recorded lower pod counts than 2008.
NASS also reports there was significant unharvested acreage of soybeans in Georgia, North Carolina, South Carolina and Virginia. The unharvested area and expected production were included in the totals released on January 12. NASS says it will call those producers again in another month and adjust the totals if warranted. Changes would be reported when the March 10 report is released.
Wheat Planting:
The late row crop harvest that prevented the scheduled seeding of the winter wheat crop can be blamed for the smallest wheat crop since 1913. The planted area is estimated at 37.1 million acres, a 14% drop from last year. Late in the fall it was rated at 64% good to excellent, comparable to 2008. HRW acreage is down 12%, SRW, down 29% and white wheat down 1%. USDA says the lack of wheat planted can be attributed to low prices, poor weather, and a delayed harvest of row crops with wet soils particularly troublesome for the soft wheat area in the Ohio River valley. IL acreage is down 59% from 2009, MO down 46%, and OH down 21%.
Wheat Production:
The wheat supply-demand balance sheet shows lower domestic use and exports with a 76 million bushel increase in carryover. An export estimate of 825 million bushels would be the least since prior to the Russian wheat deal. USDA narrowed the estimated price range by a nickel to $4.70 to $5.00. Globally, wheat supplies are larger, helped by a healthy Russian harvest, and larger production in South America.
Grain Stocks:
Corn stocks on December 1 were estimated at 7.45 billion bushels on farm and 3.49 billion off farm, with a total of 10.9 billion bushels. That is 9% higher than year ago levels.
While the December 1 grain stocks are large, particularly for corn, the subsequent stocks reports could show faster than normal consumption because of the lower test weights. The lower levels of starch in the corn will mean feedlots and ethanol refineries will use up more bushels than normal, just to get equivalent amounts of starch. It may take two cups of water to quench your thirst, if the cups are only half full. USDA is aware of the issue and expected feed consumption has been raised as a result.
Soybean stocks on December 1 were estimated at 1.231 billion bushels on farm, 1.105 billion off farm, for a total of 2.336 billion bushels, a 3% increase over year ago levels.
Wheat stocks on December 1 totaled 559 million on farm, 1.21 billion off farm, for a total of 1.77 billion bushels. That would be 24% above year ago levels.
Summary:
USDA’s barrage of reports on January 12 contained many surprises, particularly with increased yield and acreage, with higher total production numbers for both corn and soybeans. But USDA says it is not satisfied with its estimates of states with crops still in the field, and it may use the March 10 crop report to issue revisions of the 2009 Final Report. Another surprise was the low number of acres planted to wheat, which was the least in 97 years. Grain stocks were all at healthy levels, but corn stocks could disappear at a rapid pace because of the lower starch values in many of the Cornbelt states.
Posted by Stu Ellis on 01/13 at 01:08 AM | Permalink
Comments
Posted by: Freeport, IL at January 13, 2010 8:08AM
Congrats to Irwin, Good & Tannura;
Your yield models seem to work pretty well, not an easy task for a year like this.