March 11, 2002
OF USDA MONTHLY PROJECTIONS
monthly update of world supply and consumption projections released
on March 8 contained a few surprises for the market. For the
U.S. wheat market, the forecast of use for the current marketing
year (ending May 31, 2002) was lowered by 30 million bushels.
The forecast of exports was lowered by 25 million, to a total
of only 925 million bushels. That projection represents the
smallest level of U.S. exports in 16 years and is 86 million
smaller than the exports of last year. At the projected level
of 701 million bushels, U.S. wheat stocks on June 1, 2002 will
still be 175 million less than the inventory on the same date
last year. For the rest of the world, the USDA projected a slightly
larger wheat crop, a small reduction in consumption, and a small
increase in year ending stocks.
the projection of U.S. corn exports for the current marketing
year (ending August 31, 2002) was reduced by 50 million bushels,
to a total of 1.925 billion bushels. That projection is 10 million
less than actual exports of a year ago. The reduction was anticipated
because of the sluggish rate of exports during the first half
of the marketing year and the recent cancellations of sales
to China. For the current year, the USDA reduced the projection
of Chinese imports by 30 million bushels and increased the projection
of Argentine exports by 20 million bushels.
expected that the smaller U.S. export projection would be at
least partially offset by a larger projection of domestic corn
use. The March report, however, left the projection of domestic
use unchanged. The March 1 Grain Stocks report to be released
at the end of the month will provide more insight on the rate
of domestic use. At 1.596 billion bushels, year ending stocks
of U.S. corn are expected to be 50 million bushels larger than
last month's projection, but 303 million smaller than stocks
at the beginning of the year. The 2001-02 marketing year average
farm price is projected in a range of $1.85 to $2.05, compared
to last month's projection of $1.85 to $2.15, and last year's
average of $1.85.
case of soybeans, the USDA increased the projection of the U.S.
crush for the current marketing year (ending August 31, 2002)
by 5 million bushels, to a total of 1.685 billion. That projection
is 44 million larger than the record crush of a year ago. The
increase in the crush, compared to last month, reflects a larger
projection of domestic meal consumption, presumably reflecting
the expected increase in hog production as well as the rapid
rate of use to date.
of U.S. soybean exports remained unchanged at 1.02 billion bushels
in spite of a rapid rate of exports to date and the recent easing
of Chinese certificate requirements for genetically altered
soybeans. The estimate of the current soybean harvest in Brazil
was increased by 37 million bushels, reflecting an increase
in both the acreage and average yield estimates. The South American
crop is now estimated at 2.776 billion bushels, 8 percent larger
than last year's record harvest. The projection of Brazilian
exports was increased by 7 million bushels and the projection
of Chinese imports was reduced by 18 million bushels.
stocks of U.S. soybeans are projected at 265 million bushels,
5 million less than projected last month, but 17 million more
than stocks at the beginning of the year. The persistence of
low prices is expected to keep consumption at a high level,
so that the record world crops of 2001-02 will be entirely consumed.
The U.S. 2001-02 marketing year average farm price is projected
in a range of $4.05 to $4.45, compared to last month's projection
of $4.00 to $4.60. The lower price reflects a reduction in the
expected average price of soybean oil.
cash price of soybeans in central Illinois increased $.40 per
bushel from January 2, 2002 to March 8, 2002. All of that increase
was driven by higher futures prices, as the basis remained very
stable. Most of the increase in price has occurred over the
past month as the market watched a record pace of U.S. exports
and some weather problems in South America.
cash price of corn in central Illinois has traded in a range
of only $.10 since January 2, 2002. The average basis strengthened
about $.07 during that period. Corn prices have been held in
check by a sluggish pace of exports and widespread expectations
that U.S. corn acreage will increase significantly in 2002.
The increase is expected to come from unplanted acreage in some
northern growing areas in 2001, from the movement towards a
corn-corn-soybean rotation in some midwestern areas, and from
reduced cotton and/or rice acreage.
benign weather conditions in the U.S. and some late season improvement
in weather in South America, corn and soybean prices may well
trade in a narrow range through the rest of the month. The USDA's
Prospective Plantings and Grain Stocks reports to be released
at the end of the month could provide direction for prices.
In general, the market still expects a bit of a seasonal rally