USDA Report - The Bottom Line, And Looking Ahead

The bottom line from yesterday's USDA reports are that world production of corn, wheat and soybeans is all seen higher this month than last. Ending stocks for all three are also seen increasing. Indeed, world ending stocks for wheat and soybeans are seen increasing sharply, with only corn seeing a slight decrease.

If you want the scores on the doors, here they are:

Global 2009-10 wheat production was projected at 678.01 MMT, up 570,000 tonnes from February. World wheat ending stocks were projected at 196.77 MMT in 2009-10, up 910,000 MT from 195.86 MMT in February and up 31.2 MMT, or 19%, from 165.57 MMT in 2008-09.

World corn production in 2009-10 was projected at 803.69 MMT, up 5.86 million tonnes from 797.83 MMT in February. Global corn ending stocks were projected at 140.15 MMT for 2009-10, up 6.11 MMT, or 5%, from 134.04 MMT in February but down 6.25 MMT, or 4%, from 146.4 MMT in 2008-09.

Global soybean production in 2009-10 was projected at 255.91 MMT, up 890,000 MT from 255.02 MMT in February. Ending stocks were projected at 60.67 MMT in 2009-10, up 940,000 MT from February and up 18.65 MMT, or 44%, from 42.02 MMT the previous year.

It looks like we can safely say that we aren't going to starve in 2010 then. Is that all the bearish news out of the way, or is there more to come?

The next set of figures from the USDA will be planting intentions on March 31st. With corn the only one of the three likely to see lower ending stocks in 2009/10 then it looks a pretty good bet that we will see US farmers plant more corn this spring.

They've already reduced winter wheat acres, and spring wheat plantings are only likely to partially make up for that. Soybean planted area will hold steady, or maybe also increase slightly I feel, in the wake of strong demand. Especially as the restoration of the dollar a gallon biodiesel tax credit for 2010 that had expired at the end of last year has now been approved by the Senate.

US farmers might also feel that a repeat performance of bumper crops from South America again next season is unlikely. There are already rumblings of dissatisfaction amongst Brazilian growers that they will be unwilling to produce soybeans to sell at a loss again in 2011.

Corners are likely to be cut, with possibly a small reduction in planted area, but more likely reduced inputs. Lower quality seed, less fertiliser and lack spraying against Asian Rust and pests by many are highly likely I'd have thought.