US crops grow, but so does demand

The forecast for the size of this fall's US corn and soy crops continues to rise, but as they grow, so does demand.

 

"The bottom line here is, demand is the great equalizer. Soy production is up 46 million bushels, but demand is up 36 million. For corn production is up 194 million bushels, and demand is up 150 million," said Don Roose, president, US Commodities.

 

There were few surprises in crop production and supply and demand reports released Friday from the US Department of Agriculture.

 

The USDA estimated the 2009-10 US corn crop at 12.955 billion bushels. This compares to trade estimates of 12.932 billion bushels and the August USDA estimate of 12.761 billion. Output for 2008 was 12.101 billion.

 

Corn yields for the fall harvest were seen at 161.9 bushels per acre, versus 161.5 bushels estimated by the trade and 159.5 forecast in August by USDA. Yield in 2008 was 153.9 bushels.

 

Ending stocks for the current 2009-10 corn marketing year were 1.635 billion bushels, below the 1.768 billion-bushel trade estimate and slightly higher than 1.621 billion August estimate. Ending stocks are what's left over after accounting for supply and demand. Higher use by the ethanol industry and livestock feeders helped to pull down the ending stocks.

 

The USDA said the 2009-10 US soy crop is estimated at 3.245 billion bushels. This compares to trade estimates of 3.256 billion bushels and the August estimate of 3.199 billion. Output for 2007 was 2.959 billion.

 

Soy yields for the fall harvest were seen at 42.3 bushels per acre, versus 42.4 bushels estimated by the trade and 41.7 forecast in August by USDA. Last year yields were 39.6 bushels.

 

Ending stocks for the 2009-10 soy marketing year were 220 million bushels, under the 226 million-bushel trade estimate and higher compared to the August estimate of 210 million.

 

USDA's estimate for corn yield at 161.9 bushels would be a record if realized, but both Roose and Jim Bower of Bower Trading said given the late maturity of the crop that number will remain in question. Bower also said the soy yield of 42.3 bushels might also change, especially if a frost hits immature crops. Both men spoke at a press briefing sponsored by the CME Group (CME) at the Chicago Board of Trade, following the release of USDA's data.

 

"It will be a race to the finish," Roose said.

 

Bower noted that USDA measured the number of ears and ear length in determining the yield. "Ear weight and kernel depth will be an outlier," he said, and could eventually change USDA's estimate.

 

The USDA's yield estimate should also undercut some of the much lower yield estimates gathered by satellite imagery that circulated in the market ahead of the report.

 

Bower called the data neutral for wheat and soy and slightly friendly for corn. He also said support for the markets could come from a lower dollar and strong weekly export sales data which was also released by USDA Friday morning.

 

Wheat ending stocks for 2009-10 were at 743 million bushels, under the trade estimate of 769 million bushels and the August figure was 743 million.