Market News

USDA supply and demand revisions show smaller ending stocks

The USDA's monthlysupply and demand update showed continued tightening of grain and oilseed supplies. According to ADM analyst Dan Zwicker the numbers were all very friendly. However, market reaction was mixed with corn up on the revisions, soybeans mostly lower on expectations for increased production in the 2009/10marketing year and the wheat complex led higher by Minneapolis on spring wheat planting concerns.

2008/09 U.S. wheat ending stocks came out at 669 million bushels, compared to the average pre-report guess of 687 million bushels and the April estimate of 697 million. Thesupply side of the balance sheet was unchanged. The USDA lowered their food use guess 3 million bushels to 922 million, bringing domestic use to 1.251 billion. In kind of a surprise, the export estimate was raised by 30 million bushels to 1.010 billion, which pushes total use to 2.261 billion. Theaverage 2008/09 farm price is projected at $6.85 per bushel, compared to April's range of $6.70 to $6.90 and the 2007/08 average of $6.48.

2009/10 U.S. wheat ending stocks are seen at 637 million bushels, compared to the average pre-report projection of 653 million.USDA's expecting 2009/10 production to total 2.026 billion bushels, compared to 2.5 billion a year ago, with the total supply down 120 million bushels on the year at 2.810 billion. Food use is pegged at 955 million bushels, up 33 million from 2008/09, while feed and residual use is placed at240 million bushels, down 10 million from the current marketing year. That brings the domestic use total to 1.273 billion bushels, compared to the 2008/09 projection of 1.251 billion bushels. Exports are estimated at 900 million bushels, taking total use to 2.173 billion bushels. The 2009/10 averagefarm price is estimated at $4.70 to $5.70 per bushel.

2008/09 corn ending stocks were reported at 1.600 billion bushels, compared to the average pre-report estimate of 1.711 billion bushels and the April guess of 1.700 billion. The USDA didn't make any changes to thesupply side of the balance sheet. Food, seed and industrial use came out at 5.040 billion bushels, up 50 million from the prior report, and ethanol use was placed at 3.750 billion bushels, also 50 million more than April, taking the domestic use total to 10.390 billion. The export use estimate wasraised 50 million bushels to 1.750 billion, adjusting total use to 12.140 billion bushels. The average 2008/09 farm price is projected at $4.10 to $4.30 per bushel, compared to 2007/08's average of $4.20.

2009/10 corn ending stocks are projected at 1.145 billionbushels, compared to the average pre-report guess of 1.383 billion. Production is expected to be down from 2008/09 to 2009/10 on smaller planted area, taking the total supply estimate to 13.705 billion bushels. On the demand side, an anticipated 100 million bushel decrease in feed use is offset byexpectations for increased food, seed and industrial use, in addition to a projected increase in ethanol demand, bringing the domestic use total to 10.660 billion bushels. 2009/10 export demand is seen at 1.900 billion bushels, pushing total use to 12.560 billion bushels. The average 2009/10 farmprice is pegged at $3.70 to $4.50 per bushel.

2008/09 soybean ending stocks came out at 130 million bushels, matching the pre-report estimate and down 35 million from April. The USDA raised the crush estimate 5 million bushels to 1.640 billion and increased exports by 30million to 1.240 billion while leaving seed and residual use estimates unchanged. That puts total supply at 3.046 billion bushels, compared to April's estimate of 3.011 billion. The average 2008/09 farm price is placed at $9.85 per bushel, compared to 2007/08's average of $10.10.

2009/10 soybean ending stocks are seen at 230 million bushels, just under the average pre-report estimate of 239 million. With production projected at 3.195 billion bushels and beginning stocks of 130 million, in addition to 12 million bushels imported, the total supply is peggedat 3.337 billion bushels. The crush is seen at 1.675 billion bushels and exports are pegged at 1.260 billion bushels, both up from 2008/09. The seed use estimate was lowered 2 million bushels to 92 million while the residual use guess was raised by 6 million to 79 million, bringing the total useprojection to 3.107 billion bushels. The average 2009/10 farm price is estimated at $8.45 to $10.45 per bushel.

2008/09 world wheat ending stocks came out at 167.05 million tons, with production at 682.68 million and exports at 129.78 million. Global feed use is seen at115.47 million tons. 2009/10 world wheat ending stocks are pegged at 181.90 million tons, with production at 657.62 million, exports at 123.71 million and feed use at 111.49 million tons.

2008/09 world corn ending stocks were reported at 139.58 million tons, with productionat 787.83 million, exports at 76.93 million and feed use of 481.16 million tons. For the 2009/10 marketing year, corn stocks are seen at 128.19 million tons, with production at 785.14 million, exports at 81.14 million and feed use at 484.60 million tons.

2009/10 worldsoybean ending stocks were pegged at 42.55 million tons, with production at 212.79 million, the crush at 192.76 million and exports at 73.18 million tons. The closely watched Argentina production estimate was lowered to 34 million tons. In 2009/10, USDA expects ending stocks to be 51.88 milliontons, with production at 241.72 million tons, the crush at 200.83 million and exports at 75.30 million tons.

USDA's next round of supply and demand estimates are out June 10.