04/09/2010

Summary of USDA's March 31 Prospective Plantings Report

The release of the USDA acreage estimates for 2010, the "Prospective Plantings report", provides the first survey-based estimate of US acreage planted for harvest during 2010 (and an update of farmer's winter wheat planting intentions).  The survey provided helps develop guidance and expectations for the forthcoming 2010/11-crop year.  Total acreage declined from a year ago, with a sharp decline in winter wheat area offset in part by an expected increase in corn, soybean, spring wheat and cotton area.

The USDA's estimate of 2010 corn area was 88.8 mm acres, a gain of 3% and the 2nd largest (2007 93.5 mm) in over 50 years.  Based on a normal percent harvested (91.5%) and trend yields (159 BPA) an implied 2010 US corn crop of 12.9 B bushels - close to the record 13.1 B bushels produced during 2009, but short of projected 2010/11 usage of 13.5 B bushels.  The survey has an average error (up or down) of 1.1 mm acres, and with cooperative weather, it would not be unreasonable to expect an upward revision in 2010 US corn acreage.  Given the projected crop of 12.9 B bushels and usage of 13.5 B bushels, stocks at the end of the 2010/11 crop year are projected to decline to 1.37 B bushels (10.2% of usage), down from 1.91 B this year (14.8% of usage).  The results of this acreage report imply a modest decrease in stocks at the end of the 2010/11 (although weather and actual acreage planted remain as risks).

The 2010 US soybean area is projected to rise to a record 78.1 mm acres - up 1% from a year ago but slightly below expectations.  Using a trend yield of 43.0 BPA and normal percent harvested (98.5%), a 2010 US soybean crop of 3.31 B bushels is projected, off 2% from the record 2009 crop.  With a record South American crop currently being harvested (35% larger than a year ago), the US soybean demand during the 2010/11 crop-year is expected to decline fairly dramatically.  As a result, soybean stocks are projected to rebound sharply to 315 mm bushels (10.1% of usage) by the end of the 10/11 crop year, well above the 112 mm bushels (3.3% of usage) expected at the end of 2009/10.

The US total wheat acreage is forecast to decline to 53.8 mm acres, the lowest total since 1971.  Winter wheat acreage is pegged at 37.7 mm, down from 43.3 mm last year but revised up .6 mm from the USDA's January forecast (HRW revised up .5 mm to 28.3 mm vs. 27.8 YA; SRW revised up .1 mm to 6.0 mm vs. 8.5 mm YA; white at 3.4 mm vs. 3.5 mm YA).

Spring wheat plantings are larger than expected at 13.9 mm vs. 13.3 mm YA - anecdotally, the evidence would suggest this number will ultimately be revised down (note that average error in this estimate is .7 mm acres).  This includes HRS acreage at 13.3 mm vs. 12.6 mm YA.  Durum acreage is forecast to decline to 2.22 mm (vs. 2.55 YA), reflecting poor returns relative to other crops.

The net result of these acreage estimates is that with trend yields, a 2010 US wheat crop of 1946 mm is projected, down 11% from a year ago (2216 mm) and the smallest crop since 2006.    By class this includes projections of HRW 829 (vs. 919), SRW 303 (vs. 404), HRS 485 (vs. 548), white 252 (vs. 236) and durum 76 (vs. 109).

The USDA will released their first forecast of 2010 winter wheat production, as well as their first official forecast of 2010/11 supply/demand for wheat on May 11.  Stocks are expected to remain large - forecast to finish 2009/10 at 950 mm, and declining only slightly to 851 mm at the end of the 2010/11-crop year. 

Bill Lapp