USDA’s September Crop Report raised corn production and lowered bean production estimates, but along with the US numbers, there were some significant changes made in the worldwide balance of grain production and stocks which will impact markets in the near term.

USDA’s World Agricultural Supply and Demand Estimates usda take the US numbers into account to build a picture of global supply and demand. Without excessive details, let’s skim the 39 page update:

Wheat
• US carryout for the marketing year will be the lowest since the 1973 crop.
• Higher prices for wheat have limited feeding, but lower quality wheat is being milled.
• US exports continue to rise because of the tight world supply, pushing season average prices to a range of $5.50 to $6.10 per bushel.
• Global production estimates are down because of lower yields in Australia, Canada and Europe.
• The world ending stocks for 2007/08 will be the lowest in 30 years.

Coarse Grains
• US corn production is forecast at 13.3 bil. bu, and the 155.8 average yield will be the second highest, behind 2004.
• Ethanol use is lowered because of declining plant capacity utilization and a slowdown in new plant start ups.
• Both feed and export use are expected to be 100 mil. bu. more and ending stocks will be 1.7 bil. bu.
• The average US price for new corn will range from $2.80 to $3.40.
• Global coarse grain production will be up because higher production in the US, Canada, and Russia will more than offset lower production in Argentina, Australia, China, and Europe.
• Feed grain demand in Europe will spur international trade in coarse grains, because of the higher cost of wheat for feed.

Oilseeds
• US soybean production is expected at 2.6 bil. bu, down slightly from the August estimate.
• Soybean crush and exports will both increase, leaving ending stocks at 555 mil. bu. for the marketing year just past, at 215 mil. bu. at the end of the new marketing year.
• The season average price for soybeans will be $7.35 to $8.35 per bushel, with soybean meal averaging $205 to $235 per ton, and soybean oil averaging 33 to 37 cents per pound.
• Globally, oilseed production will be down in several countries because of lower production of sunflowers and cotton seed.

Livestock
• US meat production totals for 2007 will be down slightly because increased turkey production will not be able to offset lower beef and pork production.
• For 2008, more pork will help increase total meat production.
• Exports were raised for 2007, and pork exports will be higher for 2008 as a result of more Chinese purchases.

Summary:
As the 2007 crop comes into the bin, there are indications that healthy domestic use and strong export demand will sustain corn prices around $3, bean prices near $8 per ton, and wheat prices in the upper $5 range. USDA’s global estimates indicate low wheat stocks because of continued poor weather in overseas production areas, a strong demand for corn for both ethanol and livestock feed. In fact, livestock production is expected to remain at a strong pace.