Chad Hart , ISU Extension Grain Marketing Specialist, provides a summary of the latest crop report from USDA.
Another round of lower production estimates from USDA provides additional support for the crop markets. Crop production estimates for both corn and soybeans are down again this month, tightening already low 2010/11 ending stocks. For corn, USDA brought yields down to 154.3 bushels per acre, 1.5 bushels lower than last month’s estimate. This lowers the production estimate to 12.54 billion bushels, so 2010 is still the 3rd largest corn crop on record. But it’s a crop that seems to get a little smaller each day. The yield estimates are down across much of the Corn Belt again. Iowa is down 2 to 167 bushels per acre. Illinois and Kansas are down a bushel. Missouri is down 7 bushels. North Dakota, South Dakota, Nebraska, and Ohio also saw yield declines. Continuing the trend from the last couple of months, USDA found fewer ears per acre and lower grain weights during their objective yield survey.
On the soybean side, yields are also reduced slightly to 43.9 bushels per acre, down 0.5 bushels. The 2010 soybean crop remains a record crop, but barely with production at 3.375 billion bushels. Soybean yields slipped in the Great Plains and in the Southeast, but mostly held steady in the major producing states. Iowa’s soybean yield is estimated at 52 bushels per acre.
Looking at the demand side, slight adjustments were made to the 2009 feed and ethanol lines. For the 2010 corn crop, feed and residual demand is lowered 100 million bushels to 5.3 billion, based on higher feed costs. Ethanol demand is increased by 100 million to 4.8 billion, based on record October production and USDA’s estimate of ethanol producer margins. Export demand is lowered again, to 1.95 billion bushels. The ending stocks estimate for 2010 corn is 827 million bushels, down 75 million bushels from last month and down over 500 million from a few months ago. With the lowered production and tighter stocks, the midpoint for the 2010/11 season-average price for corn is increased to $5.20 per bushel, up 20 cents from last month and $1.00 above the 2007/08 record season-average price.
For soybeans, crush demand is held steady at 1.665 billion bushels. Export demand is raised for both 2009 and 2010 crops as the record export pace continues. For 2010, soybean exports are expected to reach 1.57 billion bushels. With increased demand and decreased supply, 2010/11 ending stocks projections are lowered to 185 million bushels, down 80 million from last month. The soybean stocks-to-use ratio would be 5.5%, well below the 20-year average. The midpoint of the 2010/11 season-average price for soybeans is $11.45 per bushel, up 75 cents from last month and $1.35 above the record season-average price from 2007/08.
So some weakness is beginning to creep into corn demand, but the production reduction more than offsets it. Soybean demand is keeping up its torrid pace. The USDA price shifts continue to lag behind the futures markets as season-average prices based on futures before the release of the reports had 2010/11 corn and soybeans at $5.46 and $11.80, respectively.
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