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Wednesday, May 09, 2012

Market Anticipating Bearish Numbers In USDA May Supply-Demand Report


USDA releases its May Supply and Demand report on Thursday, which is the Department’s initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for the 2012/13 marketing year. It will also present the first calendar-year 2013 projections of U.S. livestock, poultry, and dairy products.  The market has been anticipating the report giving bearish news, which fostered a significant sell-off of commodities on Wednesday.  Let’s look at the potential numbers…

The market anticipated large production and large carryover following the 2012 crop, subsequently July corn dropped 15.75¢, and December corn dropped 11.25¢.  July beans fell 8¢ and November beans declined 7¢.  July wheat fell 15¢ and July 2013 wheat even declined 14¢.

Dow Jones Newswires survey many of the CME traders to get a sense of what they anticipated the May Supply-Demand report would say.  The market is expecting old crop corn stocks to end the marketing year at 758 million bushels, and the 2012 crop to have more than 1.7 billion bushels left over when the next marketing year concludes in August of 2013.  In the Southern hemisphere, Argentine corn production is expected to be 20.7 mmt, and Brazilian corn at 62.7 mmt.

For soybeans, the market is expecting old crop stocks to conclude the marketing year with 221 million bushels on hand, compared to only 170 million bushels of carryout when the next marketing year ends in August 2013.  The trade anticipates Argentine soybean production this past season at 42 mmt and Brazilian soybean production at 65.5 mmt.

The All wheat number expected by the market is 2.196 billion bushels, with winter wheat at 1.634 billion, hard red winter at 990 million bushels, and soft red winter wheat at 413 million bushels.

Keep those numbers in mind when the USDA report is issued at 7:30 a.m. CDT.

By the way, the USDA’s Chief Economist announced several minor format changes in the report:
1) There will no longer be a methyl ester breakout for soybean product supply and use, because of the unavailability of reliable data.  It will be lumped in with domestic disappearance.
2) Vietnam is being added to the list of “major importers” of soybeans.  China and Eastern Europe are being removed as major importers of soybean meal, but Japan is taking their place.  Pakistan is no longer a major importer of soybean oil, but is being replaced with North Africa.

For Thursday’s USDA Supply Demand report, the market is anticipating an old crop corn carryout of 758 million, and a new crop carryout of 1.7 billion.  The market is expecting the old crop soybean carryout to be 221 million bushels, but the new crop bean carryout is expected to be 170 million.  New crop wheat production has been pegged by the market as 2.196 billion bushels.  Official numbers will be released at 7:30 Thursday morning.


Posted by Stu Ellis on 05/09 at 11:24 PM | Permalink

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