THE ALLENDALE ADVISORY REPORT Prepared by Allendale, Inc.
Commodity Wrap-Up For May 12, 2000
USDA Production, WASDE Report
(May 12, 2000) Compare today's first crop production estimates of the year since plantings have started vs what USDA projected during their February 24-February 28 outlook conference vs our latest projections which were updated on 4/15/00.
Allendale 4/15/00 USDA 2/24-28/00 USDA 5/12/00 Corn Planted 77.8 77.0 77.9 Harvest 71.07 70.30 71.10 Yield 134.65 135.50 137.00 Prod 9.569 9.525 9.740 Use 9.559 9.560 9.550 End Stks 1.813 1.714 1.984 Ave Price 2.14 1.95 1.80 Soybeans Planted 74.87 75.00 74.90 Harvest 73.76 74.00 73.90 Yield 39.04 40.00 40.00 Prod 2.879 2.960 2.955 Use 2.720 2.801 2.763 End Stks .473 .510 .495 Ave Price 4.50 4.45 4.50 Wheat Planted 61.66 62.00 61.70 Harvest 53.94 54.00 52.50 Yield 40.95 39.30 42.60 Prod 2.209 2.120 2.239 Use 2.395 2.325 2.435 End Stks .866 .892 .837 Ave Price 2.70 2.75 2.65 Take Note
Provided the Midwest weather the most glaring piece of data which sticks out is the season average prices for all three commodities. And of course one of the most talked about topics this morning is the fact USDA released a near 2 billion bushel end stock for 2000/01 corn versus a year ago level of 1.829 billion bushels and a very similar season average price.
Highlights
USDA estimates the corn trend yield at 137.1 bushels/acre which is the second highest on record with 138.6 the leader from the 1994 crop. The five-year average is 127.1 bushels/acre. USDA's total corn supply estimate of 11.535 billion bushels is the highest since 1987 and the third highest in history. It also represents the fifth consecutive year of year over year supply increases. The most recent time in history this has happened was from 1975 through the 1979 corn crops. Prices bottomed the third year of that run at 2.02. The 2000/01 projected corn end stocks of 1.986 billion bushels is the highest since 1992's 2.113 billion bushels carryover. The low on December corn in that year was 2.04 on November 11 with the high on March 10 of 2.76. There was a summer rally which ran futures to 2.74 up to June 9.
Will We Produce Such Crops?
Or another way to put it, have we seen the highs in new corn and new beans? The reliability of the May projection and the final estimate over the past 20 years are as follows; Changes between May projection and the final estimate for U.S. wheat production have averaged 117.5 million bushels (5.2%) ranging from -264 million bushels and 1.091 billion bushels. Changes between May projection and the final estimate for U.S. wheat end stocks have averaged 143.3 million bushels (17.1%) ranging from -330.6 million bushels and 518 million bushels.
Changes between May projection and the final estimate for U.S. coarse grain production have averaged 22.7 million metric tonnes (11.4%) ranging from -35.9 mmt and 70.3 mmt. Changes between May projection and the final estimate for U.S. coarse grain end stocks have averaged 19.8 million metric tonnes (40.2%) ranging from -57.6 mmt and 43.8 mmt. Changes between May projection and the final estimate for U.S. soybean production have averaged 158 million bushels (7.8%) ranging from -415 million bushels and 441 million bushels. Changes between May projection and the final estimate for U.S. soybean end stocks have averaged 91.8 million bushels (35.5%) ranging from -165 million bushels and 290.2 million bushels.
The Bottom Line
Our outlook has not changed from one week ago or since January 22, 2000 when we unveiled our projections. Hedgers must take advantage of current prices, but now that the USDA/NOAA/Commerce Department has issued the spring drought, cover these hedges and any old-crop grain sales with bull call spreads. Old-crop sales are made based off analyzing spreads and basis values.
May 12, 2000 Allendale, Inc. 4506 Prime Parkway, McHenry, Illinois 800-262-7538
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