The USDA Releases October Crop Production and World Supply and Demand Estimates (WASDE)

The U.S. corn production estimate for 2008 was raised 128 million bushels because of an increase in yield estimates from 152.3 bushels to 154.0 bushels per acre. Corn used for ethanol is projected to decrease 100 million bushels, in line with lower gasoline prices and weakening gasoline consumption. Feed use for corn is projected to increase because of larger supplies and significantly weaker prices. The average farm price is projected down from $5.00–6.00 per bushel to $4.20–5.20 per bushel. The drop brings farm prices back to levels experienced last year. Corn stocks were projected to increase as exports remain the same and production increases.

The U.S. coarse-grains production estimate for 2008 is higher, pushed upward mostly because of increased corn production estimates. Nevertheless, production also was increased for sorghum by 38 million bushels and barley by 22 million bushels. Sorghum prices were decreased 75 cents per bushel, barley prices were decreased 55 cents per bushel, and oat prices were decreased 45 cents per bushel.

Global coarse-grains production was raised 7.6 million metric tons, led by production increases in the European Union (EU), Canada, Russia, and the United States. World coarse-grains ending stocks only increased slightly. Nevertheless, global corn ending stocks decreased from 110.0 million metric tons to 107.8 million metric tons. Imports and exports decreased for all coarse grains. Countries are increasingly able to use improved domestic production to offset the previously projected need for imported coarse grains. World domestic total corn use alone increased 3.9 million metric tons to 800.4 million metric tons.

The U.S. wheat situation changed only slightly from the September projections. Ending-stock estimates were raised 27 million bushels with an increase in production. Yields increased to offset a small reduction in overall planted area, increasing production by 37 million bushels. Feed and residual use increased marginally by 10 million bushels. The season-average farm price dropped like most commodities following the recent fall in cash and futures prices.

Outside the United States, the record world crop continued to increase in size. The projections of 676.0 million metric tons last month was raised up 3.9 million to 680.2 million metric tons. World increases in production were lead by Canada, Russia, and Ukraine. Canadian projections were up 1.9 million metric tons, while Russian and Ukraine were both up 1 million metric tons. Trade is projected to increase with lower global prices and increasing supply. Global food, seed, and industrial use rise to offset global total grain wheat feeding. Total world wheat ending stocks are project to increase from 139.9 million metric tons to 144.4 million metric tons.

Soybean stocks in the United States are projected up 85 million bushels to 220 million bushels. The USDA raised its soybean production estimate by 49 million bushels, as a result of increased harvested area. The USDA projects that weaker soybean meal demand will cause soybean crush to decrease by 25 million bushels. Exports are expected to rise with increased domestic supply and lower prices. The season-average soybean price dropped dramatically from $11.60–13.10 per bushel to $9.60–11.10 per bushel. The USDA's soybean meal price range dropped $70 per short ton, and the soybean oil price range dropped 8 cents per pound. Again, prices changes are reflective of the recent declines in cash and futures prices.

Global oilseed production projections increased again this month. Soybean and rapeseed increases were led by Canada and the EU. Sunflower seed projections are lower because of Argentina. Cottonseed production was raised because of China's higher output. Overall, the USDA projects global oilseed stocks to increase 7.6% to 65 million metric tons.

The U.S. rice production estimates were revised lower this month because of lower yields. Yields dropped 94 pounds per acre this month after decreasing 40 pounds per acre last month. The decreased production has helped to raise prices by 10 cents per hundredweight to $15.85–16.85 per hundredweight.

Global rice production is estimated up to a record 433.2 million metric tons. Production increases were lead by Burma, Bangladesh, and Pakistan. Global ending stocks are nearly unchanged from last month’s projections.

The U.S. cotton projection only changed slightly this month. Production estimates were decreased because of lower harvested acreage, particularly in Louisiana and Mississippi, which were affected by adverse weather. Domestic demand remains flat, while the exports decrease because of lower global demand from the textile industry. Global economic conditions are projected to decrease demand for textile purchases. Cotton production has also increased in China, India, and Brazil, reducing the demand for U.S. cotton.