Farm Bureau Economist Breaks Down Latest WASDE

Economic analysis from the American Farm Bureau Federation suggests that the latest World Agricultural Supply and Demand Estimates report is setting up what could be an interesting new crop market dynamic. The report issued Tuesday morning was largely unchanged on the corn and feedgrain side – but AFBF Economist Todd Davis says supply estimates on the soybean side were reduced and U.S. exports increased to help make up for smaller South American crops. Davis says it’s a situation where soybeans – rather than corn – could become the market leader in the U.S. grain and oilseed complex.

According to Davis – Tuesday’s report – coupled with the prospective planting estimates – indicate the U.S. is in rebuilding mode in regard to the nation’s corn supply. The nation’s farmers are expected to plant 95.9-million acres – the highest corn acreage since 1937. Soybean supplies – on the other hand – are likely to move in the opposite direction and become much tighter next year. 2012 soybean plantings in the U.S. are expected to decline by more than a million acres compared to 2011. Drought that has cut into South American beans complicates the picture.

Due to an increase in the expected amount of soybean crush and stronger U.S. exports to make up for South American shortfalls – U.S. soybean ending stocks in the April WASDE were reduced by 25-million bushels to 250-million. Soybean ending stocks for 2011-12 on the world level are projected to decline to 55.52-million metric tons.

U.S. corn ending stocks for the 2011-12 marketing year were unchanged at 801-million bushels. Farm Bureau’s Davis says that is a 6.3-percent stocks-to-use ratio – or roughly a 23 day supply of corn available at the end of August. Tuesday’s report also projects greater livestock feeding of wheat instead of corn – which will reduce the amount of corn used for that purpose. Davis adds that the earlier planting of the 2012 corn crop means there’s greater potential of the new-crop corn being harvested in southern states that could be fed in August – which 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 2006-07 with a stocks-to-use ratio of 14.2-percent.


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