Supply and Demand Report Recap

John M. Riley, Extension Economist
By John M. Riley, Extension Economist August 11, 2011 21:59

Cotton acreage and yield were projected higher in this month’s World Agricultural Supply and Demand Estimates (WASDE) report released this morning by USDA’s World Agricultural Outlook Board.  The increase resulted from field data as opposed to surveys or trend analysis based on historical data.  Despite the increase in harvested acreage for the 2011 crop – from 9.6 million acres in July to 9.67 this month – abandonment is still high at 29.5% of planted acres.  Estimated yield was increased to 822 pounds per acre from 800 in June and is higher than last year’s 812.  Together this would put U.S. production at 16.55 million bales,  1.26 million bales above the average pre-report expectations.  The higher production was slightly offset by increased export estimates – from 12 million bales to 12.3.  Still, ending stocks increased again in this month’s report to 3.3 million bales.  In the current fragile economic environment this will place increased pressure on cotton prices.  Today, as most commodity prices rose, cotton prices declined due to the negative aspects of the report.

Regarding corn and soybeans, the report revealed what many expected: a drop in U.S. supplies due primarily to lower yields for both crops.  The crop has been hit with extreme heat in many predominant growing areas thus far this summer, which was exacerbated by the delayed plantings meaning the plants were at a critical stage later than normal.  Average projected U.S. corn yield was reduced from 158.7 bushels per acre in July to 153 bu/ac this month. Analysts expected a decline to 155.2 bu/ac.  Corn yield in the largest producing states (Illinois, Indiana, Iowa and Nebraska) actually is projected to increase, with the exception of Indiana.  Therefore, the drop in yield stems from fringe states.  Corn harvested acreage was also reduced marginally to 84.4 million from 84.9 last month.  Today’s report reflected re-surveyed acreage but no wholesale changes were made to national acreage numbers.

Soybean yield is currently estimated at 41.4 bu/ac, down from 43.4 bu/ac in July and lower than pre-report estimates of 42.8 bu/ac.  This is below the lowest expectation for yield by analyst of 42 bu/ac.  Planted and harvested acreage wer reduced for soybeans as well with harvested acreage now at 73.8 million.

Keep in mind this month’s projections are the first to use field data from the current crop as opposed to the historical trend (yields from 1990-2010 for corn and 1989-2009 for soybeans were used in prior estimates).

The reduction in supply for these crops was  slightly offset by projected decreases in demand.  Corn feed, ethanol, and export demand was lowered as were soybean crush and export use for the 2011 crop.

For Mississippi corn, the drought conditions present earlier in the summer became evident as expected yield is 116 bushels per acre for the state down from 136 from 2010.  Soybean yield is projected marginally higher at 40 bu/ac from 38.5 recorded last year.  Cotton yield for 2011 is currently projected at 936 pounds per acre compared to 993 in 2010.  Rice yield for Mississippi is expected to be 7,200 pounds per acre versus 6,850 last year.  Peanut yield in the state is forecast at 3,400, down slightly from 2010 which was 3,500.  Grain Sorghum yield is projected higher at 80 bushels per acre compared to 65 last year.

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John M. Riley, Extension Economist
By John M. Riley, Extension Economist August 11, 2011 21:59
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