Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University
This past Friday, November 9, USDA and the World Agricultural Outlook Board released their monthly World Agricultural Supply and Demand Estimates (WASDE) report. The report was widely viewed as having a bearish tone for crops given the significant increases in supplies and carry-over for soybeans compared to what was expected. This has spilled over into other grain and oilseed markets in the days that have followed. None the less, corn supply and use was left mostly unchanged from the October WASDE report with the only noticeable change being an increase in projected corn imports from 75 million bushels to 100 million (up 33%). Estimated yield per acre was raised slightly to 122.3 bushels, compared to an average of analyst expectations of 122.1 and 122.0 reported the previous month. This raised U.S. production 19 million bushels to 10.725 billion. Analysts were looking for harvested acres to drop slightly from 87.7 million in October’s report to 87.1 million but USDA left those unchanged in the current report. Expected corn used for food purposes was the only demand side change in the report for corn, up 17 million bushels from last month to 1.367 billion bushels (when excluding corn used for ethanol). Collectively, the amount of corn that will be carried over to the next marketing year is currently pegged at 647 million bushels, up 28 million from last month’s projection. Based on this, the stocks-to-use ratio is 5.8%.
More noticeable in the report was the unexpected soybean projections. The WASDE reported an expected soybean yield of 33.9 bushels per acre, up from last month’s 37.8 bu/ac projection and outside the range of pre-report estimates where the highest guess was 39.1 bu/ac. This increase led to a larger than expected bump in production, which is currently forecast at 2.971 billion bushels versus 2.891 from pre-report expectations (with the highest guess at 2.959) and 2.860 forecasted last month. Offsetting adjustments on the demand side were seen with increases in projected crushings and exports, respectively up 20 and 80 million bushels from last month. Soybean ending stocks were reported to be an expected 140 million bushels, up 10 million from last month and seven million higher than the average of analysts’ pre-report expectation. These out-of-range changes to the soybean supply sent grain and oilseed markets tumbling until today (Tuesday, November 13).