June Supply and Demand Report Recap

The United States Department of Agriculture along with the World Ag Outlook Board released their monthly World Agriculutral Supply and Demand Estimates (WASDE) report June 12 around lunch. The report is the second to provide insight on USDA’s projections for the 2013 U.S. crop (new crop). Many expected some alterations due the slow pace to planting as a result of the cool temps and seemingly never ending rain.

Soybeans

The 2013/14 marketing year crop (new crop) saw few changes from last month’s report. Planted acres and yield remained unchanged from May. Many experts expected soybean acreage to be adjusted upward as some producers were expected to shift from corn to soybeans in response to planting delays, but the USDA is reluctant to make that call yet. Soybean use also remains unchanged with ending stocks estimated to be around 265 million bushels.

Global soybean supplies are mostly unchanged as well. Ending stocks are projected to increase in Argentina but this is more than offset by a smaller expected carry-over in Brazil. Argentina’s 2012/13 exports were lowered as a result of fiscal issues in that country leading many farmers to hold grain. Brazil’s 2012/13 production was cut and exports were increased, likely picking up some of the lost Argentinian buyers.

Cotton

On the use side, 2012/13 marketing year cotton experienced a few more changes than other crops. Both domestic use and exports were increased compared to last month’s estimates. Not surprisingly, the supply side was unchanged. Also, unlike other crops, a few supply side alterations were made to the 2013/14 marketing year crop. Projected harvested acres were lowered to 8.10 million, down 300,000 from last month’s projection, to reflect the continued drought conditions largely in West Texas and New Mexico. This resulted in a lower production estimate to 13.50 million bales, 3.6% lower than last month. While exports were increased for old crop cotton, new crop exports were lowered to a projected 11.00 million bales, down 4.3% from last month and 19.1% below the current estimate for old crop cotton. Collectively, this resulted in an expected 2.60 million bales of carry-over and a much improved stocks-to-use ratio of 17.9%.

Globally, new crop cotton ending stocks are estimated at 92.49 million bales, a mere 250,000 lower than last month’s projection. So, all in all, few changes were made. China’s expected collection of cotton for the upcoming marketing year (2013/14) slightly grew to 58.93 million bales, or 63.7% of total ending stocks.

Corn

The June WASDE report made a few adjustments to last month’s estimates for the 2013/14 marketing year corn crop. The projected corn production is set at 14.0 billion bushels, down 135 million from last month’s estimate. The decrease comes from a decrease in expected yield of 1.5 bushels/acre. The projected acres remained unchanged at 97.3 million acres, which is somewhat surprising given that many experts believed that planted acres would be reduced due to delayed planting this spring. Ending stocks were revised down by 70 million bushels, with a decrease in expected feed use but an increase in use for ethanol production. Although this report appears to be somewhat bearish for corn prices, the USDA revised their price forecast up ten cents to $4.40 to $5.20 per bushel.

Wheat

The projected harvested acres for wheat remained unchanged in the June WASDE report. The expected yield was raised by 0.5 bu/acre for a 23 million bushel increase in wheat production. Domestic wheat use remained unchanged, however exports were revised up 50 million bushels to 975 million bushels. Wheat ending stocks were revised down by 11 million bushels and expected farm price was revised up ten cents, ranging from $6.25/bu to $7.55/bu.

Rice

No changes were made to old crop or new crop rice supply and demand estimates.