Futures are mostly sharply lower across the board at mid-morning, following release of USDA Supply and Demand reports that as expected were mostly bearish. But in addition to 2013 carryout projections that were bigger than trade guesses across the board, the government's first forecast of new crop world ending stocks were also much bigger than anticipated.
Corn led the market lower initially. USDA trimmed its trend yield projection for corn to 158 bpa due to late planting this spring, but that would still result in a record crop of 14.1 billion bushels. Though demand would rise substantially after rationing from the 2012 drought, ending stocks would still swell to 2.004 billion bushels, sending the average cash price for U.S. corn down to $4.70 a bushel, $2.20 below this year's all-time high.
The U.S. could continue to fight for market share in the world market, because the agency said global corn production would swell to 35.5 billion bushels, increasing 2013 ending stocks by more than a billion bushels, though demand would also rise. Global ending stocks are projected to rise to a 13-year high.
USDA's news for soybeans wasn't much better, at least for new crop. The agency held its forecast for 2012 carryout unchanged at a very tight 125 million bushels, which helped old crop contracts limit losses after early selling, with May actually turning higher. However, the new crop balance sheet would more than double, with 2013 carryout put at 265 million bushels, more than trade guesses. USDA put 2013 production at a record 3.39 billion bushels, using a big yield of 44.5 bpa nationwide. The agency pegged the average cash price for 2013 beans at $10.50 a bushel, down $2.80 a bushel.
As with corn, USDA's forecast for 2013 global carryout was also larger than trade guesses, thanks to mounting production in South America. Imports by China would eat much of the increase, with USDA saying the country would purchase 2.5 billion bushels in all.
While the government's forecast of 2013 corn and soybean crops was completely statistical, its estimate of Winter Wheat Production was done on the season's first survey of producers. USDA put the total winter wheat crop at 1.486 billion bushels, in line with trade guesses. Hard red winter wheat accounted for 765 million bushels, with soft red at 501 million and white wheat at 214 million. Total wheat production, including a statistical projection for spring wheat and durum, was 2.057 billion bushels.
USDA made no change to its 2012 balance sheet for wheat, leaving carryout at 731 million bushels. New crop ending stocks fell only to 670 million, a little above trade guesses. Demand would fall in part due to less feeding due to lower corn prices. Exports are also expected to fall under the weight of increasing world inventories that send average U.S. prices lower, with the cash price for the crop put at $6.80, down from this year's $7.80 record.
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