Thanks to La Nina the drought in South America has further reduced the Argentine corn yield and the Brazilian soybean yield.  The impact was reported in the February USDA Supply-Demand Report, which indicated the global market would be looking more toward the US to fill its corn needs.  However, USDA does not see any extra US soybeans being tapped to meet global demand.  Those are the headlines, here are the details…

The February 9, 2012 World Agricultural Supply and Demand Estimates (WASDE) from USDA project a 50 million boost to US corn exports because of reduced production in Argentina, along with stronger corn business from importers in recent weeks.  Ending stocks for the 2011 corn crop will be reduced by 45 million bushels to 801 million, and USDA tightened the expected price range by a dime to $5.80 to $6.60. 

The lower Argentine production set several dominoes falling, in addition to the increased US exports.  USDA expects the 4.5 million ton (177 million bushels) shortfall from Argentina to create a greater demand for corn from Ukraine, Brazil, Russia, and the EU.  The predicted Argentine crop is now 22 million tons in the USDA forecast.  The WASDE report indicated “high temperatures and extensive dryness during pollination in late December and early January resulted in irreversible damage to early corn in the central growing region.”  But USDA added, “Late planted corn, which has been on the increase in recent years, will help offset some of the earlier losses, but additional rainfall is needed to stabilize production prospects.”

The USDA Supply-Demand Report for soybeans was a carbon copy of the January report, without any changes being made on US numbers.  Ending stocks were retained at 275 million bushels with no shifts in use.  However, USDA said lower soybean production estimates in South America is expected to be reflected by increased US exports in the second half of the marketing year.  USDA did tighten the range by 15 cents for soybean pricing to $11.10 to $12.30.

Globally, oilseed production was reduced by 4.9 million tons (294 million bushels) from the January estimate, with lower production in Brazil and Argentina.  The WASDE report said, “Despite widespread rains in recent weeks, the extended hot, dry period during planting and early crop development limited plantings and reduced yield prospects.”

USDA also cut US wheat ending stocks in the February report by raising exports by 25 million bushels, due to increased export demand for competitively priced feed wheat.  Ending stocks for wheat were lowered to 845 million, and USDA raised the expected price range on the bottom by 20-cents to $7.15 to $7.45 per bushel.  Globally, wheat stocks were raised 118 million bushels due to increased production in India, Morocco, and Kazakhstan.

The latest USDA supply demand report indicated lower South American crop production would result in greater corn export business in the US in the near term, and greater soybean export business for the US in the longer term.  While corn ending stocks were lowered to 801 million bushels, no changes were made in the soybean balance sheet.  For wheat, greater demand for US feed wheat will lower ending stocks to 845 million bushels.

Source: FarmGate blog