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Friday, March 09, 2012

March USDA Supply-Demand Report Not As Bullish As Expected


USDA held the rudder steady on the March Supply and Demand Estimates, leaving US corn and soybean numbers unchanged, but tightened the average price of corn, while raising estimated soybean prices.  An expected reduction in Argentine corn production did not come.  Wheat exports were raised slightly with ending stocks lowered slightly, all the result of more global wheat imports.  Here are the numbers…

The March World Agricultural Supply and Demand Estimates by USDA was met with a bearish reaction from the corn market and a neutral reaction from the soybean market, while wheat traders were a bit more excited.

Wheat exports were raised 25 mil. bu. based on sales in the past month, but domestic use dropped slightly to result in a 20 mil. bu lowering of the ending stocks.  US marketing year prices were left unchanged at $7.15 to $7.45 per bushel.  Globally, wheat trade was raised because of more imports, particularly from Iran, which has asked for deliveries before the end of the marketing year.  Global consumption was raised 3.5 MMT on higher use in Australia and Asia, but partly offset by lower use in the EU, but ending stocks were lowered 3.5 MMT.

USDA kept the US corn balance sheet unchanged, but narrowed the price range for corn by 10-cents on each end to $5.90 to $6.50.  Many in the market expected USDA to reduce its estimate of Argentine corn supplies due to the drought, but that did not happen.  Argentine sorghum production estimates were reduced slightly, and Brazilian corn production estimates were raised I MMT because of better weather prospects for the second crop that follows the current soybean crop.

The US soybean balance sheet was also left unchanged.  But USDA said that reduced soybean supplies in South America have resulted in higher prices, and that has dampened the interest of importers.  Subsequently, US soybean export estimates were not raised.  The USDA raised the average soybean market price by 30-cents to $11.40 to $12.60 per bushel.
Globally, soybean production in South America was cut by 3.5 MMT in Brazil and 1.5 MMT in Argentina all due to the drought.  Chinese soybean import estimates were reduced slightly, and global ending stocks for oilseeds were lowered by 3.4 MMT due to South American production.

The Argentine corn crop decline has stabilized, but soybean production in both Argentina and Brazil are continuing to decline.  US exports were not raised as a result of increased global demand for the shorter crop, but prices for soybeans have increased as a result of rationing.

Posted by Stu Ellis on 03/09 at 10:57 AM | Permalink

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