The world agricultural supply and demand estimates, or WASDE, report from the USDA was largely unchanged on the corn and feed grains side and generally viewed as neutral. However, on the soybean side, supply estimates were reduced and U.S. exports increased to help make up for a smaller South American crop, according to AFBF Economist Todd Davis.
“We are looking at a situation where soybeans, rather than corn, could very well become the market leader in the U.S. grain and oilseed complex,” Davis said. “Typically, corn prices usually help drive the market prices for the other grain and oilseed commodities, but given what we now know, soybeans are ready to move to the forefront.”
Davis explained that the report, coupled with prospective planting estimates from late March, indicate the United States is in rebuilding mode in regard to the nation’s corn supply, as U.S. farmers are expected to plant 95.9 million acres. This represents the highest corn acreage since 1937. But soybean supplies are likely to move in the opposite direction and become much tighter next year as 2012 U.S. soybean plantings are expected to decline by more than a million acres compared to 2011. Complicating the picture has been the drought that has already cut into South American beans.
Soybeans were clearly the newsmaker in this April WASDE report. The U.S. soybean ending stocks number was reduced by 25 million bushels to 250 million bushels. The decline was due to an increase in the expected amount of soybean crush and stronger U.S. exports to make up for the South American shortfalls.
The one catch to the USDA figures is that the “Prospective Plantings” report survey was completed on March 1 and since that time farmers have taken in the shortfall in soybeans. Troy Lust, a grain-marketing specialist with FC Stone and a farmer in Des Moines , Iowa , said even on his farm, he’s changing his planting intentions.
“The South American shortfall and the lower bean stocks means we’re switching some acres to beans,” Lust said. “I expect we’ll see about 1 million to 1.5 million more acres of beans nationwide than what was reported in March.”
On the world level, soybean-ending stocks for 2011-12 are projected to decline to 55.52 million metric tons. The Argentina soybean crop estimate has been reduced by 257 million bushels from the November estimate and the Brazilian soybeancrop has been reduced by 330 million bushels from the November estimate, again due to the drought farmers in those nations worked through this growing season.
U.S. corn ending stocks for the 2011-12 marketing year were unchanged from the March report. Pre-report estimates were for a reduction in stocks based on the March 30 grain stocks report. Davis said that projected marketing year ending corn stocks of 801 million bushels is a 6.3 percent stocks-to-use ratio, or roughly a 23-day supply of corn available at the end of August.
Also related to corn, the WASDE report projects greater livestock feeding of wheat instead of corn, which will reduce the amount of corn used for that purpose. In addition, the 2012 corn crop is being planted earlier this year, so there is greater potential of the new-crop corn being harvested in southern states that could be fed in August. Davis said that “would provide some cushion for the tight 2011-12 corn balance sheet.”
At the world level, corn-ending stocks for the 2011-12 marketing year will be the tightest since the 2006-07 marketing year with a stocks-to-use ratio of 14.2 percent, which was the tightest ending corn inventory in recent history, according to Davis.