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Mustang Sally Farm
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« Reply #210 on: March 22, 2012, 09:12:15 AM »

14 March 2012
USDA Feed Outlook March 2012
World 2011/12 coarse grain production and use are projected higher this month, but the increase in consumption is larger, trimming prospects for ending stocks.


 
Brazil’s corn production and exports are increased based on higher area for second-crop corn. Forecast EU corn feed use is increased, offsetting a reduction in expected wheat feeding. U.S. 2011/12 supply-and-use forecasts for feed grains are unchanged this month except for a small increase in oats imports and a corresponding increase in oats ending stocks. Projected ranges for 2011/12 farm prices for all feed grains are adjusted, but the midpoints of the ranges for corn and sorghum are unchanged. The midpoint of the projected price range for barley is lowered 5 cents per bushel and the range for oats is raised 5 cents per bushel.
 

World Coarse Grain Total Use and Ending Stocks
 


Domestic Outlook
 

U.S. Corn: Central Illinois Cash and Average Farm Price, Monthly
 


2011/12 Feed Grain Balance Sheet Nearly Unchanged
 
Projected U.S. feed grain supplies for 2011/12 edged up 86,000 metric tons this month on higher oats imports from Canada. The higher oats imports were reflected in projected supplies and ending stocks. Forecast feed grain supplies are 358.4 million tons, 0.1 million higher than last month’s projection but 22.1 million below 2010/11. The feed grain use forecast is unchanged from last month and is 12.8 million tons below 2010/11. At 22.9 million tons, ending stocks are forecast up less than 100,000 tons this month and are down 29 percent from 2010/11.
 
Feed and residual use for the four feed grains plus wheat on a September-August marketing year basis is unchanged again this month, remaining at 126.2 million metric tons. Grain-consuming animal units (GCAUs) are projected at 94.0 million this month, up slightly from last month's estimates due to an increase in projected broiler and turkey production that more than offsets lower beef production. The pork production forecast is unchanged from last month. The broiler production forecast is raised for the first half of the year based on January production data and stronger forecast prices. Beef production is lowered from last month. Steer and heifer slaughter is forecast lower but is partly offset by higher expected cow slaughter. Early year carcass weights are raised due to mild weather in much of the United States. Turkey production is forecast higher as higher prices are expected to encourage a more rapid expansion. Egg production is lowered slightly for 2012 as prices are forecast lower. Feed and residual use for the four feed grains plus wheat per animal unit is down slightly this month at 1.34 tons. This compares with 1.39 tons in 2010/11.
 

Forecast Oats Imports Raised 5 Million Bushels
 
There were no changes in U.S. corn, sorghum, or barley supply-and-use estimates this month. The strong pace of shipments from Canada is reflected in a 5-million bushel increase in U.S. oats imports. Oats use is unchanged and ending stocks are forecast 5 million bushels higher than last month.
 
The midpoint of the projected range for the 2011/12 corn price received by farmers is unchanged this month, but the range is narrowed by 10 cents on both the high and low ends to $5.90 and $6.50 per bushel. The projected range for the sorghum farm price is also narrowed by 10 cents on both the high and low ends to $5.80 and $6.40 per bushel. The high end of the barley price range was lowered 10 cents per bushel, resulting in a 5-cent decline in the midpoint to $5.35 per bushel. The lower end of the oats price range was increased 10 cents per bushel, resulting in an increase in the midpoint to $3.45 per bushel.
 

Ethanol Projection Unchanged
 
Projected U.S. corn use for fuel is unchanged this month at 5 billion bushels. Recent lower weekly ethanol production and higher stock levels, according to Energy Information Administration data, are consistent with last month’s projection. Current ethanol production has returned to levels close to those prior to last December's increase. The sluggish U.S. economy, high gasoline prices, and increased auto efficiency have reduced gasoline demand, lowering gasoline production. As ethanol blending nears practical limits at the 10-percent level (E10 blends), demand growth has slowed. Exports continue to play an important role in supporting domestic ethanol production; however, the E10 blend wall issue persists and prospects for long-term exports are uncertain. Currently tight sugarcane supplies in Brazil have curtailed ethanol production there and resulted in imports of U.S. corn-based ethanol. This situation has also enabled the United States to fill Brazil’s role as an ethanol supplier to the EU and other ethanol importers. As sugar prices decline, these markets may return to competitively priced Brazilian ethanol.
 

U.S. Corn Ending Stocks
 


March Planting Intentions and Stocks Report Are Keys to Price Prospects
 
Grain Stocks and Prospective Plantings are key reports that will be released by the USDA’s National Agricultural Statistics Service on March 30, 2012. The stocks report will show grain stocks as of March 1, 2012. Lower-than expected March 1 stocks would imply greater corn usage than expected in the quarter ending March 1 and would be bullish for prices. A higher-than-expected stock level could moderate prices somewhat. At the February 23-24, 2012, USDA Outlook Conference, corn plantings this spring were projected at 94 million acres. Prices will likely respond if planted acreage is substantially different than this projection. In the past 20 years, the March projection was below the final acreage estimate 8 times and above it 12 times.
 

U.S. Corn Exports
 


International Outlook
 
World Coarse Grain Production Prospects Increase
 
Global coarse grain production in 2011/12 is forecast up 1.5 million tons this month to 1,143.7 million. World corn production is up 0.9 million tons to a record 865.0 million. Barley, oats, rye, and mixed grain production prospects are virtually unchanged this month, but millet is up 1.5 million tons to 33.7 million, and sorghum is down 0.9 million tons to 59.8 million.
 
India reported revised production for harvests from the past monsoon season and reported planted area for some dry-season (mostly irrigated) crops. Millet production for 2011/12 is up 1.5 million tons to 12.5 million based on increased area estimated for both 2010/11 and 2011/12, as well as good yields again this year. The previous year’s millet production was revised up 0.7 million tons to 13.3 million. India’s corn area is also increased for both years and yields are raised for 2010/11, increasing production 0.5 million tons each year to 21.5 million tons for 2011/12 prospects and to 21.7 million for 2010/11. The same reports indicate lower sorghum area for both years but an increase in estimated yield for 2010/11 and reduced yield prospects for 2011/12. Sorghum production for 2010/11 is increased 0.3 million tons to 7.0 million, but 2011/12 is forecast down 0.7 million tons this month to 6.1 million.
 
Brazil’s corn production projected for 2011/12 is up 1.0 million tons this month to 62.0 million. Area is increased 0.3 million hectares to 15.3 million as prospects for second-crop corn plantings in Parana are supported by attractive prices. Average yield is reduced slightly as some first-crop corn has been damaged by above-normal temperatures and below-normal precipitation.
 
Argentina’s 2011/12 corn crop remains projected at 22.0 million tons as recent good rains have stabilized yield prospects, especially for late-planted corn. However, an analysis of 2010/11 supply and demand reveals corn production was larger than previously estimated, up 1.3 million tons this month to a record 23.8 million tons, based on increased area. Chile’s 2011/12 corn production is projected up 0.1 million tons to 1.6 million based on higher reported area and yield. There are small increases this month for corn production in Australia, Kyrgyzstan, and Azerbaijan.
 
Partly offsetting are reduced 2011/12 corn production prospects for South Africa and Ecuador. South Africa reports larger-than-expected corn area, as prices have been attractive, but spotty rains and above normal temperatures have cut yield prospects. Corn production is projected down 0.5 million tons to 12.0 million. For Ecuador, excessive rains have reduced both area and yield prospects, cutting production 0.3 million tons to 0.9 million. There is also a small reduction in corn production prospects for Uruguay.
 
For 2011/12 barley production prospects, a 0.1-million-ton reduction each for South Korea and China are offset by similar-sized increases for Azerbaijan and India. For sorghum, in addition to the India change, production prospects are reduced 0.2 million tons in Argentina to 4.2 million, with the effects of earlier drought reducing yield potential. There is also a small increase in sorghum production for Australia and a reduction for Uruguay.
 


Brazil's Corn Production and Yield
 


Global coarse grain beginning stocks forecast for 2011/12 are almost unchanged this month. World corn beginning stocks are up 0.2 million tons to 129.1 million, mostly due to an increase for Argentina caused by a significant increase in estimated 2010/11 production. Sorghum and millet beginning stocks for 2011/12 are up slightly due to increased 2010/11 production in India. However, global 2011/12 barley beginning stocks are down 0.3 million tons this month, mostly because of reduced 2010/11 production for China.
 
Increased World Coarse Grain Consumption Projected
 
Global coarse grain consumption in 2011/12 is projected up 2.2 million tons this month to 1,152.0 million, with feed and residual use up 1.9 million tons to 664.7 million. Corn total use is forecast up 1.9 million tons, with feed increased 1.4 million. World and India’s millet consumption is up 1.2 million, with feed increased 0.6 million. Global sorghum use is cut 0.5 million tons, nearly all food use in India. World barley use is down 0.6 million tons as reductions for Australia, China, and South Korea more than offset increased use forecast for Azerbaijan and Iran.
 
Corn use in the EU for 2011/12 is projected up 1.0 million tons to 65.9 million as corn is being priced competitively into feed rations compared to feed-quality wheat. EU wheat feeding is forecast down 1.0 million tons this month to 55.5 million. India’s corn feed use is projected up 0.4 million tons to 9.7 million, with increased corn production and dynamic demand for eggs and poultry meat. Corn feed use is forecast 0.1 million tons higher for Chile and Peru, with smaller increases for South Africa, Australia, and Kyrgyzstan. However, Malaysia’s corn feed use is reduced 0.3 million tons to 2.9 million because poultry production is relatively flat. Corn food, seed, and industrial use is forecast down 0.1 million tons each for India and the Philippines but increased slightly for Peru and South Africa.
 

Projected 2011/12 World Ending Stocks Reduced
 
Global coarse grain ending stocks for 2011/12 are projected down 0.6 million tons this month to 157.9 million, as increased forecast use exceeds the production increase. Corn stocks are forecast down 0.8 million tons to 124.5 million, sorghum is down 0.2 million to 4.2 million, oats are down 0.1 million tons to 3.5 million. Rye stocks are down slightly, but millet is up 0.4 million tons to 0.9 million and barley is up 0.2 million tons to 22.2 million.
 
EU corn ending stocks are reduced 0.5 million tons this month due to increased feed use. South Africa’s corn ending stocks are also cut 0.5 million tons and Ecuador’s stocks are trimmed 0.1 million mostly due to reduced production prospects. Peru’s expected corn ending stocks are reduced 0.1 million tons as reduced beginning stocks and strong use more than offset increased imports. Partly offsetting are increased corn stocks expected this month for Argentina, up 0.25 million tons, and for India, up 0.2 million, based on higher beginning stocks.
 
Sorghum 2011/12 ending stocks are reduced slightly this month for Sudan, with reduced beginning stocks on lower 2010/11 imports; for Australia, with increased exports; for India, due to lower production; and for Colombia, with lower beginning stocks. Oats stocks in Canada are trimmed by increased exports. Large millet production in India is boosting expected stocks. Most of the increased global barley stocks are in Iran, which is appears to be increasing imports to boost stocks.
 

Global 2011/12 Coarse Grain Trade Projected Higher
 
World 2011/12 coarse grain trade is forecast to reach 121.4 million tons, up 1.3 million this month. Corn trade accounts for about half the increase, up 0.7 million tons this month to 96.3 million, the highest in 4 years. Barley trade is up 0.4 million tons to 17.4 million, and oats trade is up 0.2 million to 2.2 million.
 
EU corn imports are increased 0.5 million tons to 4.5 million based on the pace of imports to date and import licenses for future imports. Developing dryness for winter crops in Spain may be contributing to the recent pace of corn import buying. Peru’s 2011/12 corn imports are increased 0.2 million tons to 1.8 million as revisions to 2010/11 imports and feed use indicate larger imports are needed to sustain poultry production. Ecuador’s imports are forecast up 0.1 million tons to 0.4 million, as imports replace a portion of reduced production. There is a small increase in corn imports by Ukraine based on trade data. However, Malaysia’s projected corn imports are reduced 0.2 million tons to 3.1 million as corn feed demand appears to be flat since 2009/10. Philippines corn import prospects are reduced 0.1 million tons this month as the pace of purchases has been sluggish and alternative supplies of feed-quality wheat are abundant.
 
Brazil’s 2011/12 (October-September) corn exports are increased 0.5 million tons to 9.5 million. With increased second-crop production, export prospects are enhanced as that is the crop that mostly receives government subsidies for transportation and arrives at ports when loading capacity is not being monopolized by soybeans. India’s corn exports are raised 0.2 million tons to 2.4 million based on the recent pace of shipments. Corn exports are projected up slightly for Australia and Malaysia but reduced for Ecuador.
 
U.S. corn exports are unchanged this month at 43.5 million tons. Based on Census shipments from October 2011 through January 2012, and February Inspections data, actual shipments to date exceed the previous year’s pace. However, as of March 1, 2012, outstanding export sales are down 20 percent, so U.S. corn exports in the second half of 2011/12 are projected to be significantly slower than a year ago.
 
Global barley trade is increased 0.4 million tons to 17.4 million. Based on recent reported purchases, Iran’s imports are increased 0.3 million tons to 0.7 million and China’s imports are up 0.2 million to 2.0 million. Australia, with ample domestic supplies of feed-quality wheat, is projected to feed less barley and export more, boosting exports 0.4 million tons to 4.0 million.
 
Oats trade is increased 0.2 million tons to 2.2 million. Based on the recent pace of shipments, Canada’s exports and U.S. imports are each raised 0.2 million tons.

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« Reply #211 on: March 26, 2012, 11:40:33 PM »


US Seed Supply Gets Boost from South America
26 March 2012



ANALYSIS - In October 2011, many US seed companies realized that, due to the record-setting summer heat during the day and night, there was a lack of pollination that caused target yields for seed corn to be about 75 per cent of expectations, writes Sarah Mikesell, senior editor.



Wyffels Hybrid production field in Chile.

Seed companies, depending on their carryover levels, chose to augment that production by going to South America to fill the 25 per cent deficit needed to avoid a 2012 shortage.

 Wyffels Hybrids, a US-based seed company, was like most seed companies in that same range of supply, but the difference was - they recognized what was occurring and how it would affect their overall supply about a month before their competitors.

"Wyffels recognized that yields could be less than anticipated and began our South American launch of product early on," said Bob Wyffels, vice president of production. "We have been producing seed corn in South America for 15 years and have strong relationships there, so we were able to aggressively line up growers and better fields and locations for our seed production acres. We were able to plant early, and today we are bringing back corn on a timely basis, likely earlier than others."



Bob Wyffels, VP of production for Wyffels Hybrid.

Mr. Wyffels said in South America the seed corn crop is planted in September; pollination occurs at the end of December. Harvest is usually in February or March, and seed comes back to the US about April 1. Those dates can all be adjusted by a few weeks depending on who the company is and how aggressive they move on it.

"Overall the seed production in Chile has been excellent this year. In fact, yields are above target, so they are exceptional yields," Mr. Wyffels said. "About 20 per cent of the seed corn supply will be coming from South America, so there was a temporary shortage but that is being filled right now. We expect to be very timely on our shipments to customers and are in a very good position compared to the rest of the industry."

South American Seed Quality, Yield
 
There is an equal opportunity to have as high of quality seed regardless of whether your seed was grown in South America or the US. In fact, there is a slightly greater chance of having greater purity in South America because in Chile many of the neighboring fields for isolation are grapes, pears, nectarines and blueberries, according to Mr. Wyffels.

"In the area where we produce, there is very little commercial corn grown," he said. "There are other high value crops. So from a genetic and trait purity scenario, it's very good."

If managed properly, yields can be equal or greater than in the US. In Chile, the light intensity is greater than even the US because it seldom rains in Chile, so you have 120 days of nothing but sunshine.

"It's all irrigated by the snow melt from the Andes Mountains through furrow irrigation," Mr. Wyffels said. "In the US, you don't think much about it, but you have sunny days, rainy days and cloudy days - many days where you don't have full light intensity. In Chile, it's 99 per cent sunny days, and the temperatures are more moderate than the US."



Wyffels Hybrid production field in Chile.

Transporting Seed to US
 
There are two ways to get the seed back to the US. Whenever possible, companies use an ocean-going vessel. However, if seed is being harvested during the latter part of the season and needs transported more quickly to accommodate an early planting date, companies can resort to air freight, meaning seed is put on a Boeing 747 or 767 and is flown to the US.

"Last week Wyffels had seed on 14 ocean-going vessels from South America headed to the United States," he said. "The seed ships into two major ports - Philadephia and Miami - where it goes through US customs. And then trains load it from containers to a van trailer, and it takes about two days to get it to our plant located in Illinois."

From the date of harvest in Chile until Wyffels delivers it on-farm to their customers is about 30 days.

Best Practice Puts Wyffels Ahead
 
Wyffels Hybrids' hands-on, in-field approach is a best management practice that gives them an advantage over competitors.

"We feel our aggressive approach to supply led us to act early and be in a great position," Mr. Wyffels said. "We know some of our seed was on the first vessel coming back, so we are able to get seed delivered to customers earlier. These are practices we've honed as an independent, entrepreneurial company."

He said three-fourths of the seed is already on-farm right now and within a few weeks, seed delivery will be complete.

"I think having the seed on-farm at this time puts farmers' minds to rest, and when you get this kind of heat wave, it makes growers antsy to get into their fields," Mr. Wyffels noted. "However, I am not a proponent of early planting. I'd advise growers to stay in their normal planting window."
 
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« Reply #212 on: March 28, 2012, 03:59:45 AM »

Tuesday, March 27, 2012
CME: Grain Markets Await Plantings & Stocks Report
US - Grain markets are anxiously looking at the upcoming USDA reports on plantings and grain stocks, write Steve Meyer and Len Steiner.


Trade continues to simultaneously asses the amount of rationing that will be needed through the end of August and the supply of new corn that will come to market this fall. Corn futures have been trading in a narrow range as both bulls and bears have been unable to make a convincing case so far. That could change on Friday (reports are issued at 7.30 am Chicago time).

A survey of analysts conducted by Dow Jones indicated that on average they expect total plantings of 94.7 million acres, 2.8 million acres or 3% more than a year ago and higher than the 2012 USDA outlook forum estimate. There is a significant spread in the analyst projections, with some pegging total corn plantings to be well over 95 million acres. Excellent weather in many areas has encouraged some producers to get an early start, a somewhat risky proposition given the risks of an April freeze. Still, early planted corn offers significant rewards as it reduces the risk of a yield loss in late July and early August. It also allows farmers to bring their crop to market a little early and benefit from the price spread between old and new crop. July corn is currently priced at $6.42/bushel while Sep stands at $5.79 and Dec is $5.55. Early plantings also could pull more acres away from beans although this supply could be marginal.

We have included the last supply/demand corn table that showed the preliminary (and unofficial) USDA estimates for the upcoming corn crop. Based on 94 million planted acres, USDA projected ending corn stocks for 2011/12 at 1.6 billion bushels or 12% of use, a dramatic improvement over the current year that projects ending stocks at just 800 million bushels or 6.3% of use. An additional million acres of plantings could yield an extra 150 million bushels of production. Should this kind of volume materialize, it could push prices below the $5 threshold. But it is a big if and market participants remain unconvinced.

On the production side, there is no guarantee that an early planting window will boost yields, it just reduces the chance that yields will collapse. Short term drought conditions in Northwest Iowa and points north and west bears watching. The increase in corn acres comes at a price. Some of the acres will be corn on corn, which reduces yields. Also, more acres will come from marginal land, which again tends to negatively affect yields. Expecting 164 bushels per acre (USDA adjusted trend) could prove to be illusory. On the demand side, trade continues to struggle with projected export demand (China), livestock and poultry use (they can’t eat just DDGs, can they?) and the ethanol blend wall. In the short term, however, the corn market will remain focused on planted acres for the new crop while March stocks could help (or further confuse) where we stand with old crop supplies. Either way, it is shaping up as another interesting Friday.




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« Reply #213 on: April 01, 2012, 09:47:45 AM »


Report: U.S. farmers say they'll plant most corn acres since 1937
Purdue University Extension   |   Updated: March 31,2012

WEST LAFAYETTE, Ind. - U.S. grain farmers this spring intend to plant the nation's highest corn acreage since 1937, according to a U.S. Department of Agriculture report released Friday (March 30).

According to the Prospective Plantings Report by the National Agricultural Statistics Service, the nation's growers indicated they would plant 95.9 million acres of corn, up more than 4 percent, or nearly 4 million acres, from 2011.

They also expected to plant only 73.9 million acres of soybeans, down 1.4 percent, or more than 1 million acres, from 2011.

The projections are based on an early March survey of growers nationwide.

"It's obviously important to see where producers are at right here at the beginning of the planting season," said Chris Hurt, Purdue Extension agricultural economist. "They are saying they're going to be very heavy in corn planting here in the Midwest, so overall, there are big numbers on corn acreage but low acreage intentions on soybeans."

In Indiana, producers said they would increase corn acres by 200,000 acres but reduce soybean acreage by the same amount. Ohio growers said they would increase corn acres even more substantially with a 400,000-acre jump. Growers expected Ohio soybean acres to stay the same.

"The increase in Indiana corn acreage is going to come entirely out of soybean acreage," said Corinne Alexander, Purdue Extension agricultural economist. "Ohio's soybean acres are flat, so the largest portion of that corn acreage increase is going to come from a reduction in wheat acres. What doesn't come from wheat acres, we expect largely to come from 2011's prevented planting acres and from conservation land."

In addition to the plantings report, USDA-NASS also released its March Grain Stocks report. The report shows the availability of grain stocks in the U.S. as of March 1.

The U.S. has about 6 billion bushels of corn stocks, about 140 million bushels lower than what trade markets expected, according to the report. Soybean stocks came in at 1.372 billion bushels, up 11 million bushels from expectations.

"It's no surprise to anyone that these numbers are down substantially from where they were a year ago," Alexander said. "Where the surprises come in is that they're down even more than expected. Because of the difference, we're expecting this to be pretty bullish for old crop corn prices. The report is pretty neutral on soybeans because the trade had pretty good estimates of what the stocks report would say."

But even with soybean stocks slightly better than expected, prices have been on the rise. And with the influx of a lot of new crop corn on the horizon, Hurt said growers might want to reconsider their planting intentions.

"As we look at the implications of these reports, I think one of the clear ones is that the very large corn acreage will depress new crop corn prices, but the low soybean acreage will be overall increasing to new crop prices of beans," he said. "The market now, in the next several days or weeks, is going to try to still buy more bean acres. So I think producers should rethink that corn and soybean mix, or at least redo their calculations and put beans a little bit higher in their priorities this year."

According to Hurt, soybean futures prices as of March 29 were about $25 per acre more profitable than corn.

Hurt and Alexander estimated that with an average 2012 crop yield, the national average corn price could be about $5.25 per bushel and beans about $11.75. In that case, Midwest farmers would see the highest soybean revenues and second-highest corn revenues in history.

But the high revenues don't tell the whole story. The cost of producing those crops is up an estimated 15-20 percent this year, so the total returns actually will be down somewhat from 2011.
"The returns are coming down, but they're coming down from record-high levels," Hurt said.

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« Reply #214 on: April 04, 2012, 08:34:39 AM »

Tuesday, April 03, 2012
Winter Precipitation and Corn Yield
US - Due to the very warm temperatures in the winter of 2011-12, we recently examined the relationship between average winter temperatures and average temperatures the following summer and the relationship between average winter temperatures and corn yield, write Scott Irwin and Darrel Good.


We showed that the correlation between average winter temperature and both average summer temperature and average state yield is small for Illinois and Iowa. Here we extend the analysis to the relationship between total state average precipitation during December, January, and February and the total precipitation in the following July and August. In addition, we examine the relationship between the total winter precipitation and the trend-adjusted corn yield the following year.Once again, the analysis is conducted for Illinois and Iowa (the two largest corn producing states) over the period 1960 through 2011.

The relationship between total winter and summer precipitation is presented in Figures 1 and 2. The correlations indicate a slight negative relationship between winter and summer precipitation in Illinois and virtually no relationship in Iowa (correlations can vary between -1 and +1, with zero indicating no relationship). The weakness of the relationships is most evident in the wide scatter of data points around each line. Winters with above- and below-average precipitation are associated with a wide range of precipitation the following summer.

 


Given the slight relationship between winter and summer precipitation in Illinois and Iowa, it would not be surprising to find little relationship between winter precipitation and the state average trend-adjusted corn yield the following year. That expectation is confirmed by Figures 3 and 4, which actually show a small negative relationship between average winter precipitation and trend-adjusted average state yield. Nonetheless, in contrast to winter temperatures, there is a logical reason to think that winter precipitation should actually be positively related to corn yields. Specifically, winter precipitation contributes to the preseason charging of soil moisture reserves, which ultimately contributes to higher yields. If one excludes several outliers from the plots (1983, 1988, and 1993) there is indeed a small positive relationship between winter precipitation and corn yield in both states. This is what we found in our previous modeling work on corn yields with the use of a more complete model specification. It is, of course, important to keep in mind that the impact of precipitation before the growing season is small compared to precipitation during the growing season. The yield impact of moving from the minimum to the maximum winter precipitation observed over 1960-2012 in both states is at most 5 bushels per acre.

 


Conclusion
There is little correlation between winter weather (temperature or precipitation) and summer weather. This is consistent with the view that, beyond seasonal tendencies, weather is very difficult to predict over time horizons longer than a few weeks. There may be some predictability over longer horizons due to so-called ENSO events (e.g., El Nino and La Nina), but the reliability of such patterns for predicting U.S. Corn Belt growing season conditions is still open to considerable debate.

In contrast to winter temperature, winter precipitation is likely to have a small impact on corn yields in the following growing season. The available data indicate December, January, and February precipitation in Illinois (6.8 inches) was near average and in Iowa (4.3 inches) above average. Preliminary data indicates March was drier than average. On balance, this suggests little impact of winter 2012 precipitation relative to trend yield in either state.

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« Reply #215 on: April 06, 2012, 09:21:54 AM »


Corn, Rice & Wheat Imports to Continue to Meet Food Demand
05 April 2012



VENEZUELA - Venezuela is expected to continue importing significant amounts of yellow corn, rice and wheat to meet domestic food demand and requirements of the animal feed industry and to offset decreasing domestic grain production.

During the last ten years, Venezuela has increasingly turned to imports to meet its demand for food. According to the FAO figures, Venezuela imports more than 70 per cent of its food supply.
 
For grains, all the yellow corn used by the animal feed industry and almost all the wheat is imported and it is now importing about 40 per cent of its rice demand. Two years ago Venezuela began importing white corn (a product that is part of the basic diet of Venezuelans) for the first time since 1997.
 
Misguided agricultural policies were exacerbated by bad weather conditions (particularly the devastating rains of December 2010) that drastically decreased the country’s corn and sorghum production of 2011/2012. Rice production has been recovering after two years of poor harvests but imports will still be needed.
 
The Bolivarian Government of Venezuela (BGV) publically states that food production is in the national interest and is fundamental to the economic and social development of the Nation.
 
In January 2011, the BGV launched “Mission Agro-Venezuela”, which has three main goals: increase production of staple crops, increase the amount of land under production, and promote and stimulate urban agriculture.
 
The programme will provide low-interest loans, machinery, and technical assistance to farmers all over the country. A fund of one billion bolivars ($232 million) has been assigned. The government aims to cut food and agricultural imports by 30 per cent in the first year of Mission Agro-Venezuela.
 
Despite these plans to increase domestic production of feed and food, the gap between supply and demand is expected to remain large, and significant imports of basic feed and food grains will be needed to maintain consumption in the coming year and beyond. Post expects imports to continue strong, based on domestic food demand and the need for more feedstuffs by the expanding poultry and pork sectors.
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« Reply #216 on: April 12, 2012, 08:14:56 AM »


Oilseed Production Forecast is Up Eight Per Cent
11 April 2012



PAKISTAN - MY 2012/13 oilseed production is forecast at a record 5.8 MMT, up eight per cent from the estimated 5.7 MMT harvested in MY 2011/12.

Pakistan is a net importer of oilseeds and edible oils. Domestic production of edible oils is sufficient to meet only about 27 per cent of total demand. Domestic oilseed production includes cotton seed, sunflower seed and rapeseed.
 
MY 2012/13 oilseed production is forecast at 5.8 MMT, eight per cent higher than the revised estimate of 5.4 MMT harvested in MY 2011/12. Cottonseed regularly accounts for about 82 per cent of Pakistan’s total oilseeds production.
 
Imports of oilseeds are forecast at 1.0 MMT (80 per cent rapeseed/ canola and 19 per cent sunflower seed). Total supply of oilseed available for crushing in MY 2012/13 is forecasted at 6.2 MMT, eight per cent higher than the estimates of MY 2011/12.
 
MY 2012/13 domestic meal production is forecast at 3.0 MMT, up eight per cent from current year’s level of 2.7 MMT. MY 2012/13 imports of soybean meal are forecast at 350,000 tons, 17 per cent higher than MY 2011/12 imports.
 
Virtually all of Pakistan’s soy meal imports are sourced from India.

MY 2012/13 oil production is forecast at 1.5 MMT, eight per cent higher than current year’s estimate. Vegetable oil imports are forecast at a record 2.3 MMT, an increase of four per cent relative to MY2011/12. Palm oil accounts for 98 per cent of the total edible oil imports.
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« Reply #217 on: April 18, 2012, 10:00:09 AM »

Tuesday, April 17, 2012
Has the 2011 Corn Crop Been Rationed?
US - Corn prices declined substantially over the past week. May and December 2012 futures have declined by $.26 and $.22, respectively, following the release of the USDA’s WASDE report on 10 April, writes Darrel Good.


Recent weakness in old crop prices started with the USDA’s unchanged forecast of year-ending stocks of 801 million bushels. Following the smaller-than-expected estimate of 1 March stocks revealed on 30 March, the market had anticipated that the April WASDE report would contain a larger forecast of feed and residual use and a smaller forecast of ending stocks. Additional price weakness has been attributed to weakness in the financial markets associated with a slowdown in the Chinese economy and concerns about the Spanish debt as well as prospects for increased corn acreage in China. New crop prices continue to reflect the larger-than-expected planting intentions revealed on 30 March, an early start to the planting season, and the recent improvement in soil moisture conditions in a large part of the Corn Belt.

With prospects for relatively small ending stocks, it is important to continue to monitor the rate of corn consumption to confirm that the necessary rationing is occurring. In the Feed Outlook report released on 12 April, the USDA estimated feed and residual use of corn during the first half of the marketing year at 3.39 billion bushels, 238 million less than during the same period last year. The entire decline was in the first quarter of the year. Use in the first half of the year represents 73.7 per cent of the projected use of 4.6 billion bushels for the year. That per centage is large by historic standards, but less than the very unusual 75.7 per cent of a year ago. To reach the projection for the year, use during the last half of the year needs to be 46 million bushels larger than that of a year ago. On the surface, a year-over-year increase in feed and residual use from March through August seems unlikely given the reduction in broiler production that is occurring, expectations for fewer cattle on feed this summer, expectations of increased wheat feeding this summer, and perhaps a bit more August harvested corn in the South. However, estimated feed and residual use of corn was unusually small during the last half of the 2010-11 marketing year. Many continue to believe that use was underestimated during that period due to an overestimate of 1 September 2011 stocks. Considerable uncertainty about the on-going rate of feed and residual use will continue until the 1 June stocks estimate is released on 30 June.

The USDA also maintained the projection of marketing year corn exports at 1.7 billion bushels. That forecast is 135 million bushels, or 6.7 per cent less than exports of a year ago. Through 5 April, cumulative export inspections, adjusted by Census Bureau export estimates through February this year and March last year, were 6.9 per cent less than the total of a year ago. To reach the USDA projection, exports during the last 21 weeks of the year need to total 703 million bushels. As of 5 April, the USDA reported unshipped export sales of 408 million bushels. New sales need to average about 14 million bushels per week in order for sales to reach 1.7 billion bushels. For the 5 weeks ended 5 April, new sales average 29.9 million bushels per week. It appears that sales are on track to reach, or slightly exceed, the USDA projection. The rate of shipments, however, needs to increase by about 5 million bushels per week from the most recent 5-week average pace of about 28.2 million bushels.

The use of corn for ethanol and co-product production during the current year is forecast by the USDA at 5 billion bushels, 21 million less than used last year. Use during the first half of the year was estimated to be 81 million larger than use of a year ago. To reach the projection for the year, use during the last half of the year needs to be 4.1 per cent less than that of a year ago. For the 5 week period ended on 6 April 2012, ethanol production was estimated to be 1.5 per cent less than in the same period last year. While the pace of ethanol production has slowed, it is above that needed to reach the projected level of corn use for the year.

While futures prices have decline over the past week, basis levels remain generally strong and the May/July futures inversion has increased. These relationships suggest on-going tightness in stocks and/or a slow rate of movement relative to the pace of consumption. While evidence about the pace of consumption is mixed, expect corn prices to remain under pressure until there is convincing evidence that the necessary rationing has not occurred or concerns about 2012 production develop.

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« Reply #218 on: April 19, 2012, 07:30:18 AM »

Wednesday, April 18, 2012
CME: Corn Plantings off to a Strong Start
US - With spring weather (some would say summer weather) across the Midwest, crop plantings are off to a strong start, write Steve Meyer and Len Steiner.


But as the chart below shows, even with all the news stories of early plantings, today we are still near the levels we saw back in 2010. USDA reported that for week ending April 15, US farmers had planted about 17% of the corn crop. This compares to 5% planted for the same period last year and 5% for the five year average 2007-11. Trade reports indicate that market participants were anticipating plantings to be somewhere between 17— 20% so the survey results will likely could be construed as neutral to maybe slightly bullish by futures markets. Market participants in the grain complex will be following closely the day to day changes in weather and the impact this could have on both field work as well as on the crop that was planted much earlier than normal and could be subjected to any late freezes. Much of the advanced plantings has taken place in the Eastern Corn Belt (ECB). Illinois plantings currently stand at 41%, compared to just 8% a year ago and 6% for the five year average. Indiana plantings are at 24% compared to a mere 2% last week. Western Corn Belt plantings, which includes big corn producing states such as Iowa, are not as far along. Iowa plantings are currently pegged at just 5% compared to 1% last year and 3% for the five year average.

For livestock producers, the early start of field work and lack of any weather pressures to this point certainly are good news. Also positive from a livestock producer point of view is the good progress in the wheat complex, which should bring more wheat into the feed complex later this summer. For the last two weeks we have been hearing about the great shape of the wheat crop and the fact that the crop was heading much earlier than normal. The latest USDA report appears to support the anecdotal reports. For the week ending April 15, 29% of the US winter wheat crop was reported to be heading. This compares to 11% last year and just 8% for the five year average. This is tremendous progress which could bring a wheat crop to market much earlier than before and could help boost supplies IF there is no weather event in the next few weeks. A crop that is heading this early is vulnerable to a late April freeze but should this not occur, the chances of a bigger than expected supply become more realistic. At this point, the market is pegging new crop corn at a $5.30/bushel for December. The debate in the trade is whether the market has properly accounted for the risk of weather disruptions or if the fact that extra long positions among both producers and funds makes the market vulnerable to a downward correction should weather continue to be a non-event. At this point, the crop progress is welcome news for livestock producers but there is plenty that can happen between now and July that could affect the crop. USDA will issue its first official forecast of the corn crop on May 10., a forecast that will likely account both for the early plantings, the expanded acres and a baseline yield, likely doubling ending stocks of 2011/12.

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« Reply #219 on: April 20, 2012, 09:34:43 AM »

Thursday, April 19, 2012
Import Restrictions on Soy Would Affect Farmers
SPAIN - The Spanish government is discussing whether or not it should impose import restrictions on Argentinian products, including soybeans, in retaliation to an announcement by the Argentinian government that it will nationalise oil company, YPF.


Buenos Aires has put forward a bill that would allow it to take a controlling stake in YPF, a company owned by the Spanish energy giant, Repsol.

Soybeans and ethanol are two of the products that the Spanish government is looking at placing import restrictions on.

Spain imports between three to four million tonnes of soy a year, of which 85 per cent comes from Argentina.

Agricultural organisation, ASAJA of Castile and Leon has said that it will support the Government if they pursue the right to impose severe restrictions on imports of food products from Argentina. However, the group warned that Spain depends heavily upon soybeans and other protein products for animal feed, and therefore may have to seek other markets.

With the Spanish livestock sector currently suffering from poor profitability, high producers costs and drought, any action that pushes up the costs of production for producers should be prevented, ASAJA said.

The Union of Small Farmers and Ranchers (UPA) has said prohibiting exports of Argentinian soybeans could have serious negative effects on the livestock industry.

UPA has said that it will be difficult to find alternative sources of soy.

The organisation has urged the European Union and its Member States to consider the "irresponsible attitude" of Argentina in this case and rethink their positions ahead of the negotiation of trade agreements with Mercosur. Farmers and ranchers are adversely affected by such agreements, which tend to prioritise the interests of other sectors against the producers of food and raw materials.

UPA warned that if imports of soy were to be stopped, there would be a serious shortage, which would push prices up to unbearable levels for producers. It highlighted that the drought had made producers even more dependent on feed as grass growth was minimal.

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« Reply #220 on: May 01, 2012, 09:32:26 AM »

Monday, April 30, 2012
CME: Corn Futures Higher as China Purchases Corn
US - US nearby corn futures were sharply higher on Friday as market participants reacted to news that China purchased 1.472 million metric ton of corn (58 mil. bu.), write Steve Meyer and Len Steiner.


This was one of the biggest one time corn purchases on record to this market and it reignited speculation that old corn crop stocks are very tight and may need some rationing until the new crop starts flowing in. The fact that the new crop has been planted relatively early in the ECB should provide some notable supplies before the end of August (official end of marketing year) and yet grain markets remain concerned about the effect some cooler weather on corn breaking above ground. But back to the China story, there has been plenty of speculation in recent months as to how big a buyer of US corn China will be in the coming years.

Not very long ago, China was a net exporter of corn to a number of Asian destinations, benefiting both from a freight advantage and lower costs. However, feed demand in China has been outpacing supply increases. In 2009/10 marketing year, China produced 163.97 MMT (~6.463 bil. Bu) of corn and imported about 1.3 MMT. In marketing year 2011/12, China corn production is forecast to increase by almost 28 MMT or 17% and yet China is forecast to import 4 MMT. The increase in Chinese feed demand has tightened feed availability for a number of Asian markets that traditionally imported corn from China. And as China now accounts for 1 out of 5 bushels of corn produced in the world, the market is now vulnerable to weather events in that part of the world more so than at any other time on record.

US cow and bull slaughter continues to run well below year ago levels. While much of the attention recently has been on packers slowing down slaughter in an effort to prop up prices ahead of Memorial Day needs, the slowdown in the cow and bull slaughter is more a reflection of the fundamentals in the beef market, improving feed conditions compared to a year ago and strong feeder cattle prices out front have changed the incentives for cow-calf producers. Indeed, US cow slaughter would be down even more had it not been for the sharp pullback in milk values, which are now pushing more dairy cows to market.

The weekly cow slaughter data, which are published with a two week lag, showed that for the last four reported weeks (Mar 18 - Apr 14), total US cow slaughter was 457,400 head, 5.5% lower than a year ago. During that period, beef cow slaughter was 210,600 head, 17.6% lower than a year ago while dairy cow slaughter was 246,800 head, 7.9% higher than a year ago. Dairy cow slaughter currently makes up about 54% of the overall US cow slaughter, the highest such proportion in more than 20 years. It is still early to proclaim a full rebuilding year as pasture conditions in a number of key states remain tenuous. A sharp deterioration in weather conditions could quickly impact beef cow slaughter. As for the dairy industry, increased productivity, higher cow number and, even more critically, slowing domestic and export demand, will likely cause producers to increase the pace of diary herd liquidation, but this time with no government money

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« Reply #221 on: May 11, 2012, 07:45:24 AM »

Tuesday, May 08, 2012
Brazil's Soybean, Corn Feed Prices Head Higher
ANALYSIS - Informa Economics FNP said severe weather and crop failures in south Brazil and increased consumption demand are driving up corn (maize) and soybean meal costs, putting pig and poultry farmers on alert, writes Sarah Mikesell, senior editor.

Ariovaldo Zani, executive VP of Brazil’s National Animal Feed Industry Association, Sindirações, said feed production this year will increase by 3.0 to 3.5 per cent. Feed costs account for about 60 per cent of Brazilian pig and poultry producers’ total production cost.

“The Brazilian animal feed industry depends on the food industry which, in turn, is modulated by domestic and international consumer demand,” Brazil’s National Animal Feed Industry Association said in a statement.

Soybean meal and corn account for about 80 per cent of the feed consumed by poultry and pigs in Brazil.

According to the Association, last year, 66 million tons of feed were produced, with 37.8 million tons going to poultry farms and 15.4 million tons going to pig farms. On poultry farms, 61 per cent of the feed is made up of corn and 25 per cent soybean meal, while pig feed is made up of 68 per cent corn and 16 per cent is soybean meal.

Brazil’s Corn, Soybean Markets
Informa Economics FNP believes the area planted with summer corn and soybeans for 2011/12 was up by 5.3 per cent year on year but because of the serious drought in south Brazil, production will be down about eight per cent versus the previous season. The US Department of Agriculture (USDA) has estimated an 11 per cent soybean production reduction in southern Brazil due in large part to the La Niña weather phenomenon.

For corn, the average productivity in the southern region will be much lower than last season and even less than the average of the last 10 years which will increase the dependence on the winter corn crop, said Aedson Pereira, Information Economics FNP analyst.

Winter corn areas are expected to increase but it is too early to predict if that will equate into larger production. Zani expects winter corn can make up the difference and anticipates no issues.

Brazil’s summer production will be 36 million tons in the 2011/2012 harvest, which is up 0.2 per cent over year ago, said Informa Economics FNP. This slight bump in production was the result of other regions of Brazil significantly increasing production levels.

“The numbers give the impression that competition for corn will be strong this year,” said Pereira. “The most optimistic scenario at Informa Economics FNP indicated production of 298 million tons on an area of 6.8 million hectares.”

Growth Opportunity
Expansion of soybean area in the Center–West and Northeast regions has been occurring at a very fast pace on the heels of high commodity prices and mainly through land lease contracts of abandoned farms and/or degraded pasture–lands, says the USDA GAIN report.

Possessing 20 per cent of the planet’s fresh water, Brazil also has tremendous potential to expand planted area via irrigation projects that make possible second and third crops rotated over a yearly growing season. Recent historically high crop prices have greatly improved the time–frame for return on investment with the main constraints being water use licences and capital investment requirements.

Large irrigation project investments are increasing soybean planted area and are made possible through rotating cash crop production – wheat, edible bean, cotton – based on the market’s current highest returns.

Exports Down; Recovery Expected in 2012/2013
Soybean exports in marketing year 2011/12 are estimated at 29mmt, down 14 per cent from the 2010/11 record of 33.8mmt. Over the last few months, current high prices and favorable exchange rate have directed Brazilian soybeans to the export market as opposed to the domestic crush market, according to USDA.

However, USDA expects the market to turn inward to supply crush in the second semester of 2012 as a return to traditional export windows to third markets based on price competitiveness at harvest between the US and Brazil occurs. Also, export logistics and port capacities will be strained the second half of 2011 as soybeans compete with sugar, corn, and other export crops.

These expectations together with a drought-reduced short crop will reduce Brazil’s export market share in 2011/12. That said, USDA forecasts a recovery in Brazil’s export market presence in 2012/13 reaching a new record of 35mmt based on continued strong global demand.

International Market
Competition between the domestic and international markets will be aggressive come mid-September when the US harvest is underway. Two years in a row of moderate to poor production have limited the global corn and soybean supply.

La Niñ has also had a significant impact on the Argentina corn and soybean harvests in 2011 and 2012. Despite being the third largest global soybean exporter, Argentina’s international market share slipped the last few years, contributing to the increase in international commodity prices.

Argentina’s soybean production is also slipping. In 2009/2010, it was reported at 54.5 million tons but FNP expects it to only reach 45 million tons in the current season. Corn is following a similar course, falling from 23.3 million tons harvested in 2010 to 20.5 million tons this season. Argentina’s corn exports have also seen a dip from 16.5 million tons in 2010 to 13.5 million this year.

US production was also down last year, due mostly to an exceptional wet spring in the eastern half of the Midwest followed by extreme summer heat during the critical tasseling period. This year could be brighter though, as weather has cooperated so far and US growers have been able to get crops in the ground earlier than usual.

China continues to support the demand side with major purchases of soybeans and has resumed its corn imports due to a decrease in local production. China remains the largest world consumer of corn, feeding huge numbers of poultry and pigs.

According to Informa Economics FNP, Brazilian agribusiness has increased sales to China buy three per cent while Brazil‘s export revenue to China has increase by 17.5 per cent.


Sarah Mikesell, Senior Editor
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« Reply #222 on: May 12, 2012, 10:14:34 AM »

Friday, May 11, 2012
CME: Farmers to Harvest Record Corn Crop
US - According to the latest USDA supply/demand update, US farmers this fall will harvest the largest corn crop on record, write Steve Meyer and Len Steiner.


Between a 6.1 per cent increase in harvested acres (5.1 million acres more than a year ago) and a 12.8 per cent increase in expected yields (18.8 bu./acre higher than in 2011), US corn production for the 2012/13 marketing year is now pegged at a record 14.790 billion bushels. This is 2.432 billion bushels or 20 per cent larger than a year ago and about 1.75 billion bushels larger than the previous record year output in 2009/10.

USDA was quite aggressive in its estimates for the new corn crop but its data follows established methodology whereby USDA analysts account for crop progress so far this year and adjust their trend yields accordingly. With planting progress well ahead of schedule so far this year and weather forecasts indicating that the La Nina weather pattern is coming to an end, USDA now expects above trend yields this coming fall. Some analysts continue to wonder how realistic this assumption is.

The sharp expansion in corn plantings has brought more marginal and lower yielding acres into the mix. While US farmers have approached current yield estimates in the past, indeed yields were 165 bu./acre in 2009/10, that yield was from planting 86.4 million acres, compared to 95.9 million acres this year. It would appear to us that for current yield estimates to materialize, a lot of things need to be just right for this year’s corn crop. So far things are shaping up well but Mother Nature still holds all the cards.


One surprising twist in the supply and demand table was that USDA also increased projected ending stocks for old crop corn. This ran counter most analysts estimates who were expecting old crop ending stocks at around 750 million bushels, compared to the 851 million bushels that USDA reported. USDA reduced feed consumption estimates for this summer as more wheat is currently going into livestock and poultry feed.

USDA also did not change its estimates for US corn exports despite much talk in the trade of large shipment to China and other destinations. Demand estimates for the new crop were equally interesting and different from what private analysts were contemplating ahead of the report. USDA sharply increased US corn feeding estimates in the new crop year, projecting feed and residual use at 5.450 billion bushels, about 900 million bushels or 13.7 per cent higher than a year ago. This feeding level would imply a notable decline in wheat feeding, as corn / wheat spreads widen and also expansion in livestock and poultry numbers.

With the calf crop declining in the next year, cattle feed demand will remain limited, and likely will contract. Some hog expansion is expected but, based on current farrowing estimates into year end, it is unlikely we will see more than a 1 per cent increase in hog numbers at least through Q1 of next year. Maybe the broiler industry will make a sharp U-turn and expand rapidly. There are some indications that broiler supplies will recover by Q4. Lower corn prices certainly are an inducement but keep in mind that for poultry producers, soybean meal prices are very important, accounting for as much as 30 per cent of the broiler ration.

Soybean meal prices have increased sharply in recent weeks and are expected to stay high into next year as well. But even as some analysts think the feed estimates overstate the case for demand next year, they also believe the current USDA export estimate may be on the low side, especially if Chinese producers fail to produce another record crop. A potential increase in exports could offset lower feed numbers. USDA now expects the stocks/use ratio to double in 2012-13, pushing prices in the $4.5/area.
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« Reply #223 on: May 31, 2012, 07:12:36 AM »


Season for Determining Corn Yields is Underway
30 May 2012


US - The 2012 US average corn yield will be one of the dominant factors in determining the level of corn prices over the next year. Expectations about that yield have started at a pretty high level, but the critical period for yield determination is really just beginning, writes Darrel Good.

What do we know about yield potential as the summer growing season begins? The most important development to date is the generally timely planting of the crop. There is a relatively wide window of planting dates for maximum corn yield potential, with yield penalties associated with late planting. Since corn planting dates vary considerably by geographic area, corn planting occurs over a period of several weeks, and corn planting has been occurring earlier over time, there may be a number of ways to characterize timeliness of planting on a national basis. For the period beginning in 1986, we have defined late planting as the per centage of the crop planted after 20 May in the major corn producing states included in the USDA's Crop Progress report.
 
This year, only four per cent of the corn crop in the 18 major corn producing states was planted after 20 May. That is the smallest per centage of the crop planted late during the 27 year period since 1986. On average, 18 per cent of the crop was planted after May 20 from 1986 through 2011. There were 9 other years when less than 10 per cent of the crop was planted after 20 May. In those 9 years, the US average yield was within two bushels of the trend yield in 5 years. Large deviations from trend yield occurred in the early-planted years of 1987 (+ 8 bushels), 1988 (-29 bushels), and 1992 (+16.8 bushels). These yield results are not especially informative for forming expectations about the average yield in 2012. Planting date may be important for yield potential with everything else equal, but summer weather conditions ultimately determine the level of yields. The small per centage of the crop planted late this year suggests that the US average yield will be higher than if a normal per centage had been planted late, but the level of yields is still to be determined.

A second piece of early information relative to corn yield potential is the crop condition rating provided in the USDA's weekly Crop Progress report. Historically, there has been a positive relationship between the per centage of the crop rated good or excellent at the end of the season and the US average yield relative to trend. Early crop condition ratings are suggestive of yield potential, but ratings can and do change substantially by the end of the season. The first crop condition rating of the season this year showed that 77 per cent of the crop was in good or excellent condition as of May 20. Since 1986, an average of only 66 per cent of the crop was rated in good or excellent condition in the first report of the season. There were only 6 other years when the initial ratings showed 75 per cent or more of the crop in good or excellent condition. The rating at the end of the season was higher than the initial rating in two of those years (1987 and 1994) and the US average yield was well above trend in both years. The rating at the end of the season was below the initial rating in 4 of the 6 years. The average yield was near trend value in three of those years when the final ratings showed 60 to 69 per cent of the crop in good or excellent condition. The US average yield was well below trend in 1991 when the final rating showed 53 per cent in good or excellent condition.
 
A small per centage of the crop planted late this year and the early condition of the crop point to the potential for an above-trend yield in 2012, but the most important part of the season is just beginning. The corn market will continue to follow weather developments and crop condition ratings in order to refine yield expectations. At this juncture two important developments may be required in order to maintain high yield expectations. The first is some convincing evidence that the relatively long period (8 months or so) of above average temperatures is giving way to normal or below normal temperatures. The second is for soil moisture deficits in important areas of the central, eastern, and southern Corn Belt to be eliminated.
 
In addition to yield prospects, the expected size of the 2012 crop will be impacted by the magnitude of planted and harvested acreage. The USDA will provide survey-based estimates in the Acreage report to be released on 29 June. New crop corn prices are expected to remain under pressure as long as large crop expectations prevail.
 
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« Reply #224 on: June 13, 2012, 08:35:58 AM »


Update on Export Progress
12 June 2012


US - Much of the attention in the crop markets is rightly focused on the potential size of the northern hemisphere crops. Still, the on-going pace of consumption is an important measure of demand strength and the likely level of year ending stocks. Here we focus on the US export sector for wheat, corn, and soybeans, writes Darrel Good.

For wheat, the 2011-12 marketing year ended on May 31. Cumulative export inspections for the year totaled 1.036 billion bushels, slightly above last month's USDA projection of 1.025 billion bushels. Through April, cumulative Census Bureau export estimates were about 4 million bushels less than cumulative inspections. Assuming that margin persisted through May, marketing year exports were about 7 million bushels larger than forecast. For the marketing year that began on 1 June, the USDA has projected exports at 1.150 billion bushels. As of 31 May, new sales plus unshipped sales from the past marketing year totaled 235.6 million bushels, near the level of sales of a year earlier. To reach the USDA projection, shipments will need to average about 22.1 million bushels per week this year. Export inspections during the first week of the year were reported at 21.5 million bushels.
 
For corn and soybeans, the final quarter of the 2011-12 marketing year began on 1 June. Cumulative corn export inspections during the first three quarters of the year totaled 1.221 billion bushels. Through April, cumulative Census Bureau export estimates exceeded inspections by 23 million bushels. Assuming that margin persisted through May, exports during the first three quarters totaled 1.244 billion bushels, 122 million less than during the same period last year. The USDA currently forecasts marketing year exports at 1.7 billion bushels. Exports during the final quarter of the year will need to total 456 million bushels, or 34.7 million bushels per week, to reach the projection. Inspections averaged only 26.3 million bushels during the 6 weeks ended 7 June, and dropped to a marketing year low of 17 million bushels in the latest reporting week. Unshipped sales as of May 31 were reported at 304 million bushels, 87 million less than on the same date last year. For sales to reach 1.7 billion bushels, new sales will need to average 11.5 million bushels per week. The average sales pace for the 5 weeks ended May 31 was 7.4 million bushels. Export commitments to date are much larger than those of a year ago for China and Mexico, but down sharply for Japan, Taiwan, and South Korea. It now appears that exports for the year will be 75 to 80 million bushels less than projected as US corn has lost market share to feed wheat. The USDA will update the projection on 12 June.
 
Cumulative export inspections of soybeans totaled 1.164 billion bushels during the first three quarters of the 2011-12 marketing year. Through April, cumulative Census Bureau export estimates were about 6 million bushels less than inspections. If that margin persisted through May, exports totaled about 1.158 billion bushels, 237 million less than in the first three quarters last year. For the year, USDA has projected exports at 1.315 billion bushels. To reach that projection exports during the final quarter will need to total 157 million bushels, or an average of 11.9 bushels per week. Inspections during the 6 weeks ended June 7 averaged 14.9 million per week. Unshipped sales as of May 31 totaled 192 million bushels, compared to 154 million on the same date last year. It now appears that marketing year exports could exceed the USDA projection (to be updated on June 12) by as much as 25 million bushels as the U.S benefits from the shortfall in South American production. China continues to be the major purchaser of US soybeans (62 per cent to date) and has already made large purchases for delivery during the 2012-13 marketing year.
 
It appears that corn exports will come up well short of 1.7 billion bushels, pointing to larger year-ending stocks than currently projected. Some of the shortfall in exports may be made up by slightly larger consumption for ethanol production as ethanol production during the first three quarters of the year was about two per cent larger than production a year earlier. The big unknown, however, is the magnitude of feed and residual use of corn during the last half of the year. Quarterly use in that category has been difficult to anticipate over the past two years. The 1 June corn stocks estimate, along with the level of wheat prices, and the pace of maturity of the 2012 corn crop will shed more light on use in that category.
 
While month-end acreage and stocks reports will be important for crop prices, prices will continue to be heavily influenced by 2012 yield prospects. To date, the corn market has displayed relatively little concern about the cumulative and upcoming moisture deficits in large areas of the central, eastern, and southern growing areas.
 
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