Friday, July 11, 2009

Corn and beans put in an up and down session today with both closing modestly lower. The main feature today was the July USDA Supply and Demand report, the first report to incorporate the June 30 planted acreage estimates. The updates this morning were a bit negative as USDA made upward revisions in U.S. corn stocks forecasts with wheat supply increased as well. As expected USDA increased the 2008/09 and 2009/10 carryout estimates for corn with 2009 now estimated at 1.770 billion bushels and 2010 1.550 compare to 1.600 and 1.050 respectively last month. The old crop carryout estimate is larger than expected as USDA took 100 million bushels off of both Feed and Industrial usage reflecting the poor economics faced by the livestock and ethanol sectors for much of the past 6 months. The USDA is estimating the 2009 corn crop at 12.290 billion bushel, a number that no one seems to be comfortable with, eastern corn belt producers feel the 153.4 bpa estimate is too high while western belt producers feel it is 5 bpa too low! There will be many revisions to come obviously but the current feeling is that corn stocks will continue adequate for the next year at least.

The USDA took the conservative approach in this month's soybean revisions, leaving old crop 2009 stocks unchanged at 110 million bushels despite a 10 mbu increase in exports and a 5 mbu increase in the domestic bean crush estimate. The 15 mbu increase in demand was offset by a 15 mbu decrease in residual usage. With residual usage still estimated at 59 mbu don't be surprised if USDA finds a way to keep carryout unchanged in Aug. and Sept. even if the export pace continues strong for the season as it currently has been. For the new crop balance table USDA is now estimating a comfortable 250 mbu, up 40 mbu from a month ago. USDA did not make many changed in world soybean S&D numbers this month.

Phil Farrell