Today marks the release of the August USDA World Agriculture Supply and Demand report. Heading into the report the focus has defiantly been yields based off the current cropping conditions the pre-report estimates signaled an increase in production this year, but like we mentioned heading into the report “demand could easily offset production”. Taking a look at the key changes, first we will look at the yields. The corn yield is an estimated 165bpa up from the July estimate of 163.5bpa, within the average trade guess of 162-167.4bpa. Soybean yields came in at 44 bpa up from the and at the upper end of the average trade guess of 42-44bpa. As for wheat, wheat production increased after a stronger than expected harvest this year. The USDA estimates the wheat yield to be 46.9bpa up from the July 45.9.
Taking a look at the key changes in this report; corn production is an estimated 13.365 within the trade expectations of 13.12-13.53 billion bushels. Corn yields and production are at record levels this year if achieved. However, demand is outpacing the stronger production prospects. Old crop ending stocks/carryin is projected 52 million bushels reflecting higher expected exports, corn use for sweeteners and starch, and a small reduction to imports of 2009/2010. For 2010/2011 domestic corn use rose 30 million bushels reflecting higher use for sweeteners and starch. Exports are projected 100 million bushels higher as tighter foreign supplies of wheat and coarse grains raise the prospects for US corn shipments. So despite higher production ending stocks are projected down 61 million bushels at 1.3 billion, the lowest level in 4 years but within the trade expectations. US corn stocks to usage the lowest since 2003/2004 and the 3rd lowest since 1975.
As for Soybeans, production is an estimated 3.433 billion bushels at the upper end of the trade estimates and 88 million bushels higher than July. Soybeans are now at a record yield of 44bpa and a record production level. Demand, exports were raised 65 million bushels to 1.435 billion. The sharp increase reflects the strong export sales that we touched on earlier, reduction of soybean stocks in South America, and larger forecasted imports by China. Soybean ending stocks are projected at 360 million bushels, unchanged from last month within the trade estimates.
Finally, the wheat market was prepared for lower supplies, but the picture may be brighter than earlier anticipated. Wheat production increase to 2.265billion bushels, slightly higher than the pre report trade range based on higher yields. Feed and residual use is lowered 10 million bushels as rising values have price wheat out of feed rations. Exports are projected 200 million bushels higher with the declines in foreign production, particularly in FSU-12, reducing global supplies and bring competitiveness back to the US market in the middle east and Africa which are key markets. US ending stocks for wheat are projected 141 million bushels lower from last month at 952 million bushels., and down 21 million from 2009/2010. The average wheat prices is expected to rise 50cents/bushel on both ends of the range.
World wheat imports and exports were reduced sharply as tighter supplies and higher prices will reduce consumption. Global wheat production fell sharply by 15.3 million tons based on the FSU-12 reductions and EU-27 countries. Russia was lowered 8mmt, Kazakhstan was lowered 2.5mmt, Ukraine production lowered 3 million tons, and EU-27 lowered 4.3 million tons. Global ending stocks are projected 12.3 million tons lower at 174.8 million tons. World stocks are still 49.9 million tons higher than in 2007/2008 when prices soared to record levels.