Chicago corn and soybean futures edged higher Tuesday morning after the U.S. Department of Agriculture released its monthly supply and demand report.
USDA lowered its corn and soybean ending stocks projections.
Wheat futures retreated as the report increased global wheat supply.
The USDA’s commentary on the report follows.
WHEAT: U.S. wheat ending stocks for 2009-10 are projected five million bushel higher this month reflecting an increase in expected imports.
Imports are raised based on expected shipments of South American and European feed quality wheat into the southeastern U.S. market.
Exports of all wheat are unchanged, but by-class adjustments include a 10-million bu. increase in hard red winter wheat and five million bu. decreases in both hard red spring and durum wheat.
The projected marketing-year average farm price is narrowed 5 cents on both ends of the range to $4.75 to $4.95 US per bu.
Global wheat supplies for 2009-10 are projected 1.4 million tonnes higher reflecting production increases for Argentina and Ukraine.
Argentina production is raised one million tonnes as abundant, late-season rains raised harvested area and yields in key eastern growing areas.
Ukraine production is increased 0.4 million tonnes as the latest revisions to state statistical committee estimates boost yields, more than offsetting a small reduction in harvested area.
Global wheat imports and exports for 2009-10 are both raised this month mostly reflecting higher expected shipments for Argentina and increased regional trade for Turkey.
Exports are raised one million tonnes for Argentina with larger supplies and recently more favorable government policies toward exports.
Exports for Turkey are raised 0.3 million tonnes reflecting stronger shipments to other countries in the region.
Partly offsetting are reductions of 0.5 million tonnes and 0.2 million tonnes, respectively, for Pakistan and Uruguay exports.
Imports are raised 0.7 million tonnes for Afghanistan and 0.5 million tonnes for Turkey.
Imports are raised 0.4 million tonnes for Uzbekistan. Partly offsetting is a 0.5-million-tonne import reduction for Pakistan.
Global wheat consumption for 2009-10 is raised 1.1 million tonnes mostly on higher feeding in Canada and increased food use in Afghanistan.
Higher consumption mostly offsets this month’s increase in world production with projected global ending stocks rising 0.3 million tonnes.
COARSE GRAINS: U.S. feed grain ending stocks for 2009-10 are projected lower this month with higher expected corn use and sorghum exports.
Corn used for ethanol is projected 100 million bu. higher reflecting the latest ethanol production data from the Energy Information Agency.
November’s record ethanol production was up three percent from the previous record in October as higher prices for ethanol and distillers grains boosted ethanol producer returns.
November-December corn use for ethanol was up 16 percent from the same period in 2008-09.
Although returns have declined since November, recently lower corn prices continue to support profitability for ethanol producers.
A 5-million-bu. reduction in expected corn use for sweeteners partly offsets the increase for ethanol.
Corn exports for 2009-10 are projected 50 million bu. lower on increased competition from Argentina.
Ending stocks are projected 45 million bu. lower.
The projected marketing- year average farm price for corn is narrowed 5 cents on both ends of the range to $3.45 to $3.95 per bu.
Global coarse grain production for 2009-10 is projected 1.6 million tonnes higher this month with higher Argentina corn production only partly offset by lower EU-27 corn production and lower Ukraine barley and oats production.
Argentina corn production is raised 2.2 million tonnes with higher expected yields and harvested area as growing conditions continue to improve with additional rainfall in the main corn areas.
Late planting and short-term heat stress in the western growing areas temper prospects as a substantial portion of the growing season is still ahead.
EU-27 corn production is lowered 0.4 million tonnes on downward revisions to area for Italy.
Ukraine barley and oats production are each lowered 0.2 million tonnes reflecting the latest revisions to state statistical committee estimates.
A number of small, offsetting revisions are made for Russia coarse grains production.
Global coarse grain imports and exports for 2009-10 are both raised slightly this month.
The reduction in U.S. corn exports is more than offset by a 1.5-million-ton increase for Argentina.
Sorghum imports are raised for Japan and Mexico with the increase in U.S. sorghum exports.
Other major trade changes this month include a 0.5-million-tonne reduction in EU- 27 barley exports and a 0.5-million-tonne increase in Turkey barley exports.
Global coarse grain consumption is increased 3.4 million tonnes this month with higher corn and sorghum use more than offsetting a reduction for barley.
Higher corn use for ethanol in the U.S. and higher corn feeding in Argentina account for most of the increase.
Sorghum feeding is raised for Australia, Japan, and Mexico.
Barley feeding is lowered for Australia, Iran, Turkey, and Ukraine.
Global coarse grain ending stocks are projected one million tonnes lower with a 2.1-million-tonne reduction for corn partly offset by a 1.1-million-tonne increase for barley.
OILSEEDS: Projected U.S. soybean ending stocks for 2009-10 are reduced to 210 million bu., down 35 million from last month due to increased exports and crush.
Soybean exports are raised 25 million bu. to 1.4 billion as export shipments continue to exceed earlier projections.
Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year’s historic drought in Argentina continue to support U.S. exports.
Soybean crush is raised 10 million bu. to 1.72 billion reflecting a strong soybean meal exports and a lower soybean meal extraction rate.
Soybean oil stocks are projected higher this month as the increased crush more than offsets a small reduction in the soybean oil extraction rate.
Soybean oil used for methyl ester is unchanged this month despite reduced production due to the loss of the $1 per gallon blending credit at the end of December.
The recent Environmental Protection Agency announcement of final rules for the 2009 and 2010 biodiesel mandates is expected to result in offsetting production gains through the end of the 2009-10 marketing year.
The U.S. season-average soybean price range for 2009-10 is projected at $8.70 to $10.20 per bu., down 20 cents on both ends of the range.
The soybean meal price is projected at $270 to $320 per short ton, up $5 on both ends.
The soybean oil price is projected at 33.5 to 36.5 cents per pound, down 2.5 cents on both ends of the range.
Global oilseed production for 2009-10 is projected at 433.7 million tonnes, up 2.1 million from last month.
Global soybean production is raised 1.6 million tonnes to 255 million tonnes. Improved production prospects for South America account for most of the change.
Soybean production for Brazil is projected at 66 million tonnes, up one million from last month due to higher yields.
Soybean production is also raised for Paraguay and Uruguay.
Global sunflowerseed production is projected higher due to gains for Ukraine and Russia.
Global rapeseed production is raised this month due to a larger projected crop for EU-27.
Global oilseed trade is raised 0.9 million tonnes to 96.3 million tonnes, mainly due to increased soybean imports for China and Egypt.
Higher global oilseed crush mainly reflects increased rapeseed crush in Canada, China, and EU-27.
Global oilseed stocks are mostly unchanged at 71.1 million tonnes.
LIVESTOCK, POULTRY, AND DAIRY: Total U.S. meat production for 2010 is little changed as higher beef production is more than offset by lower forecast production of pork and turkey.
The USDA cattle report estimated the cattle numbers on Jan. 1, 2010, declined from the previous year, but implied the number of cattle outside feedlots remains close to last year. Thus, forecast placements and marketings are raised, resulting in higher forecast cattle slaughter.
However, partly offsetting the increase in expected slaughter, cattle weights are reduced for early 2010 due to severe weather which has impacted weight gain.
Pork production is reduced as slaughter has been lower than expected and weights slightly lighter.
Turkey production for 2010 was reduced as the pace of growth implied by hatchery data has been less than expected
Broiler meat and egg production forecasts are unchanged from last month.
Estimated meat production for 2009 is adjusted to reflect December slaughter data.
Only small changes are made to 2009 beef exports.
There are no changes to red meat export forecasts for 2010 but the broiler export forecast is reduced from last month.
Recently announced duties on U.S. broilers by China and continued trade restrictions in several other countries will pressure broiler exports.
Cattle price forecasts are lowered for 2010 as larger numbers of fed cattle are expected to pressure prices.
Hog prices are raised as tighter supplies may help support prices.
Broiler prices are forecast higher in 2010 as domestic demand is expected to grow.
The milk production forecasts are raised for 2009 and 2010.
The forecast for 2009 reflects recent USDA estimates of fourth-quarter production.
Milk production is forecast higher for 2010 based on the higher-than-expected Jan. 1 dairy replacement heifer estimate.
Herds are not expected to decline as rapidly as forecast last month, boosting milk production
Dairy exports on a skim-solids basis for 2010 are raised, reflecting higher sales of cheese and nonfat dry milk
Import forecasts are lowered for 2010
Fat and skim-solids ending stocks are estimated higher for 2009 and stocks for 2010 are raised in the face of higher production.
Cheese and butter price forecasts for 2010 are little changed from last month.
The Class III price is raised from last month due to higher forecast whey prices, but the Class IV price forecast is lowered reflecting weaker nonfat dry milk prices
The all milk price is forecast at $16.20 to $16.90 for 2010.
