By Ros Krasny and Charles Abbott
WASHINGTON, July 11 (Reuters) – A sharp cut to projected U.S. and world wheat ending stocks for 2013-14, helped by rising livestock feeding demand from China, highlighted the U.S. Department of Agriculture’s monthly grain supply-and-demand report on Thursday.
The USDA also underlined the split nature of the U.S. corn and soybean market on Thursday, as razor-thin old-crop supplies following the 2012 drought were expected to soon give way to an abundant harvest and rising stockpiles.
Wheat futures rallied sharply on the report, pulling corn and soybean values higher as well. Sept wheat futures were up 2.3 percent, with Sept corn up 0.5 percent and Aug soybeans up 0.6 percent.
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For wheat, new-crop U.S. stocks are now expected to be the lowest since 2007-08, a bullish surprise, and world wheat ending stocks for 2012-13 and 2013-14 were slashed.
“Higher 2012-13 feed use in China accounts for most of the reduction in (2013-14) beginning stocks,” said USDA. Pakistan, Russia and Iran were also projected to consume more wheat.
China is forecast to import 8.5 million tonnes of wheat in 2013-14, up 5 million tonnes on the month and up from 3.2 million in 2012-13. That will help knock world wheat ending stocks down to 172 million tonnes from 181 million tonnes forecast a month earlier – a major surprise to the market.
Meanwhile, record high U.S. corn and soybean production is on tap for 2013-14, reversing three years of shrinking output and sky-high prices.
Despite a wet spring that delayed plantings, U.S. corn and soybean crops are in prime condition, and grain traders have started to position for a massive harvest.
In recent weeks the discount of new-crop futures to old-crop has widened to about $2 per bushel for corn and $3 for soybeans. Ahead of harvest, supplies are extremely tight. Those spreads widened again on Thursday.
Projected 2013-14 U.S. corn carryout, at 1.959 billion bushels, was above analysts’ average forecast and would be the highest since 2005-06, although it was well below some of the more bearish projections.
Some analysts were unimpressed by USDA’s 50-million-bushel cut to U.S. corn exports for 2013-14. “I think they’re underestimating exports,” said Sal Gilbertie, president of Teucrium Trading.
U.S. soybean ending stocks for 2013-14 were pegged at 295 million bushels – again, above trade expectations but not a massive surprise. By nudging the 300-million-bushel mark, stocks would be the highest since 2006-07.
USDA looks for U.S. farmers to harvest 3.4 billion bushels of soybeans this fall, easily surpassing the record high. The corn crop was pegged at 13.95 billion bushels, down from June’s projection as USDA lowered its harvested acreage estimate despite slightly higher plantings.
U.S. crop are in dramatically better shape than a year ago. Some 66 percent of U.S. corn was rated in good or excellent condition at the start of this week, compared with 40 percent a year ago. For soybeans, 67 percent were good or excellent this week, compared with 40 percent a year earlier.
“The weather probably trumps this report for U.S. production … we are coming into some critical time frames,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. Late planting could leave much of the corn and soybean crop vulnerable if an early frost strikes.
WINTER WHEAT CROP UP
USDA raised its forecast for U.S. winter wheat production to 1.543 billion bushels, above trade expectations, based on higher yields. If realized, the winter wheat yield of 47.8 bushels per acre would match the record high from 1999, USDA said.
The projected yield for Kansas, the dominant hard red winter wheat producing state, rose 2 bushels per acre from June. Soft red winter wheat production jumped 6 percent on the month.
Still, U.S. wheat ending stocks for 2013-14 will fall to 576 million bushels from 718 million in 2012-13, USDA said, raising its export forecast by 100 million bushels on Thursday following recent brisk sales.
Australia’s wheat crop for 2013-14 was raised by 1 million tonnes to 25.5 million tonnes, consistent with favorable conditions in the country’s southern and eastern growing areas. That will help the Aussies export 19 million tonnes of wheat, up 2 million tonnes from the June outlook and similar to 2012-13.
China is now forecast to import 8.5 million tonnes of wheat in 2013-14, up 5 million tonnes on the month and up from 3.2 million in 2012-13.
