WASDE: Minimal Changes in March

The WASDE had minimal changes for the U.S. balance sheet, but did have significant revisions for South America. Soybean production in South America was reduced by a total of 6.4 million tons. The lack of changes was expected for corn, but an increase to domestic soybean exports was expected.

Corn

Domestic corn balance sheets remained unchanged this month. U.S. ending stocks remained at 801 million bushels and the stocks-to-use ratio was unchanged at 6.3%. The projected range for season-average corn prices was narrowed on both ends of the range by 10 cents to $5.90 to $6.50.

2011/12 global coarse grain supplies were increased by 1.6 million tons reflecting increased production in Brazil and India. Brazil's corn production was raised by 1.0 million tons due to an expected increase in planted acres for their second crop. The increase was partially offset by reduced production in South Africa and Ecuador.

We will continue to watch South American corn production as La Niña weather patterns of extreme heat reduce yield prospects.

Soybeans

U.S. soybean supply and use projections for 2011/12 were unchanged from February to March. Domestic exports were unchanged from last month at 1.275 billion bushels which surprised analysts who expected a 75 million bushel increase. The USDA left exports unchanged due to reduced global imports because South America's decreased supply resulted in higher prices. The U.S. season-average price range for 2011/12 was increased by 30 cents on both ends of the range to $11.40 to $12.30 per bushel.

Global oilseed production for 2011/12 is now projected to decline by 6.7 million tons to 445.7 million tons due to lower foreign production. Brazil's soybean production forecast was lowered by 3.5 million tons to 68.5 million tons from last month due to lower projected yields from hot, dry conditions in the southern states. Argentina production was forecast at 46.5 million tons, a 1.5 million ton reduction, due primarily to hot and dry weather in the northeastern growing areas. Paraguay's drought resulted in a 1.4 million ton decrease from last month in soybean production to 5.0 million tons, which is 34% below early-season expectations.

If soybean prices continue to be supported by decreased foreign production, we expect an increase in soybean acres planted in 2012 at the expense of corn acreage.

Wheat

U.S. wheat ending stocks for 2011/12 were projected 20 million bushels lower in March as increased exports more than offset lower food use. Domestic food use was projected 5.0 million bushels lower reflecting flower production data reported by the North American Miller's Association. U.S. exports were increased by 25 million bushels due to strong sales and shipments. The season-average price remains unchanged at $7.15 to $7.45 per bushel.

Global wheat supplies for 2011/12 were unchanged as increased production in Australia was offset by decreased beginning stocks in China and Bangladesh.

Outlook

Moving forward, the grain markets will be closely watching South America's corn and soybean production and La Niña weather patterns affect on yields. As we move closer to planting season, we are anticipating the March 30th Prospective Planting report, which will set the tone for the 2012 season.