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Will the Support Gained off Friday's USDA Reports Hold? - 15 January 2013

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Tuesday 15th January 2013.
Sarah Mikesell - TheCropSite Senior Editor

Sarah Mikesell
Senior Editor


Will the Support Gained off Friday's USDA
Reports Hold?

On Friday, UDSA released several reports that popped corn and wheat sharply higher.

Despite the short-term pop, analysts generally agree that it's likely just that - short-term. With the South American crop looking stronger every day and prospects for a large US corn and soybean crop in 2013, new crop corn and soybean prices may remain under pressure over the mid- to long term.

The 2012 US corn crop is estimated at 10.78 billion bushels, 55 million bushels larger than the November forecast. The production estimate was larger than the pre-report average trade guess of just over 10.6 billion bushels, but the real surprise came from Dec 1 corn stocks, coming in far below expectations. Stocks were estimated at a 9-year low of 8.03 billion bushels, compared to the average guess of about 8.2 billion.

Darrel Good, ag economist with University of Illinois, said the stocks estimate implies that feed and residual use of corn has not slowed as a result of the small crop and high prices that began in June of last year. Total grain feeding has been supported by a very modest cut in livestock numbers and a sharp decline in the production of distillers' grain.

Expectations for a larger-than-expected soybean crop in the US and a big, big, big South American crop pushed beans lower in early reaction to USDA's numbers, but some of the more bullish report data including lower-than-expected stocks and stronger usage lent support on Friday, helping to break the short-term downtrend line in beans.

The 2012 US soybean crop is estimated at 3.015 billion bushels, 44 million larger than the November forecast. Stocks of soybeans on December 1, 2012 were estimated at a 9-year low of 1.966 billion bushels, implying a larger than average "residual" disappearance during the first quarter of the marketing year.

Limited exports have certainly weighed heavily on the US market recently and that doesn't look to change. Marketing year soy exports are unchanged at 1.345 billion bushels, suggesting demand will be met by expectations for a record South American crop in 2013.

The January report increased projected Brazilian soybean production to 82.5 million metric tons, but reduced Argentine soybean production to 54 million metric tons. If realized, this would be a 28 percent increase in soybean production from last year for those two nations.

Numbers were nothing but bullish for wheat on Friday when the Dec. 1 stocks figure came in lower-than-expected, indicating heavier wheat feeding during the fall quarter. The 2013 winter wheat seedings report came in nearly 2 million acres below expectations; up only slightly from last year, said analysts at Doane.

Winter wheat seeded for harvest in 2013 is estimated at 41.82 million acres, 496,000 more than seeded for harvest in 2012. The increase was smaller-than-expected, with area seeded to soft red wheat up 16 percent and area seeded to hard red and white wheat down about two percent.

USDA's adjustments in the rice outlook were somewhat bearish. And the cattle and hog markets continued to bleed red due to rising supplies and slaughter weights amid soft consumer demand, analysts said.

For all the data from last week's reports, click here and select "View by Date".

Have a great week!

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