Nogger's Blog

12/01/11 -- Just when you think you've got them sussed, both can prove difficult when you least expect it. I used to consider myself a bit of an expert at the old "one-handed undo" in the old days. Women say we can't multi-task, well call me an old romantic but I could snog, grope and simultaneously undo a bra with my spare hand (left or right, I'm ambidextrous me) all at the same time back then.

But then when I started seeing MrsN#1 it was like trying to do a rubic's in the mirror, in the dark with one hand. That was until I realised that she was wearing a completely different type of bra to the one me gran used to wear. :0

And so it is with the USDA, after years of thinking you've got them sussed they start coming out with all sorts of outlandish numbers. It's a bit like watching play your cards right where it's "higher or lower than a queen?"..."lower"..."oh, unlucky it's a king."

So what do they have in store for us this afternoon, who can tell? Maybe today's shock will be that there are no shocks and everything comes in pretty much as anticipated.

2010 CROP PRODUCTION

Only relatively minor revisions are anticipated to last year's yields and production estimates for US corn and beans. Corn yields are seen falling 0.4 bu/acre to 153.9 bu/acre and bean yields are forecast to rise 0.1 bu/acre to 44.0 bu/acre.

WINTER WHEAT AREA

There's plenty of room for a surprise here, with the range of estimates pretty wide, varying from 39.377-43.200 million acres. There is a school of thought that record high cotton prices may have "stolen" some of those anticipated wheat acres and that the real planted area may be lower than many people think.

There is also now a large question mark over exactly how many of those acres that were planted will actually make it through to harvest. Given the poor crop ratings at the end of November and the difficult winter conditions since then, the high prices of other crops is providing an incentive to rip up or graze poorly established wheat and plant something else in the spring.

2010/11 US ENDING STOCKS

The market is expecting downward revisions for wheat, corn and beans. Wheat is expected to fall on the back of increased exports, and possibly increased domestic usage due to a tight corn stock situation.

Corn stocks are seen falling on the back of reduced 2010 production and increased ethanol usage. The market seems to be disregarding the possibility that high prices may be rationing export demand and that projected exports for 2010/11 could fall, leaving carryout virtually unchanged.

Soybean ending stocks are also seen lower on improved export potential and increased domestic usage following the re-introduction of the blenders tax credit.

QUARTERLY STOCKS

Wheat stocks are estimated at 1.938 billion bushels as at Dec 1st 2010, the largest second-quarter stocks since the 1987/88.

Corn stocks are pegged at 10.067 billion bushels - the smallest first-quarter stocks number of the past four years. Bear in mind here that both the last two quarterly stocks reports (June and September, 2010) have provided major surprises. Many felt that the September report may have included some early harvested new crop corn. The continued expansion of corn usage by the ethanol sector however may be starting to impact upon corn usage in feed, given the increased availability of DDGS.

Soybean stocks are seen at 2.345 billion bushels, indicating robust first quarter usage/exports - the second largest first quarter usage ever in fact on the back of strong demand from China.

WORLD STOCKS/PRODUCTION

World wheat ending stocks are expected to decline by around 2 MMT to 174.61 MMT, still a healthy 26.2% stocks/use ratio.

Global corn ending stocks are seen falling by around 2.5 MMT, cutting stocks/use to 15%, the tightest since 1973/4. Argentine production could fall 1-2 MMT.

World soybean stocks are forecast around 1.5 MMT lower, pegging stocks/use at 22.7%. Argentine soybean production will likely be cut, but probably by only 1-2 MMT.