Smaller Year-Ending Soybean Stocks Expected

The USDA's World Agricultural Outlook Board (WAOB) released the monthly WASDE report this morning. Several changes were made in supply and consumption projections for soybeans, corn, and wheat. The most significant changes were for soybeans, but none of the changes were very surprising. Following is a brief summary and implications of the report.

Soybeans

For the current marketing year, the projection of the domestic crush was increased by 15 million bushels to a total of 1.66 billion bushels. The larger projection reflected the rate of crush to date and prospects for stronger domestic soybean meal demand. The projection of marketing year exports was increased by 20 million bushels, to a total of 1.335 billion bushels, reflecting strong Chinese demand and the small South American crop. The estimated size of the 2012 Argentine crop was reduced by 37 million bushels and the estimated size of the Brazilian crop was increased by about 18 million bushels. The forecast of Chinese imports during the current year was increased by 37 million bushels. The projection of domestic marketing year ending stocks was reduced by 35 million bushels. At 175 million bushels, projected stocks represent 5.6 percent of projected consumption. The 2011-12 marketing year average price is projected at $12.30, $.05 lower than the May projection.

For the upcoming marketing year, the projection of the domestic crush was reduced by 10 million bushels and the projection of exports was reduced by 20 million bushels. The reduction reflected the limited availability of soybeans projected for the 2012-13 marketing year. Production is still forecast at 3.205 billion bushels, but smaller beginning stocks will limit consumption next year to about 3.255 billion bushels. Year-ending stocks are expected to be reduced to a pipeline level of 140 million bushels, or 4.3 percent of expected consumption. The marketing year average price is projected in a range of $12 to $14, the same as last month's projection.

Corn

For the current marketing year, the projection of the domestic use of corn for ethanol and by-product production was increased by 50 million bushels, to a total 0f 5.05 billion, reflecting the pace of ethanol production to date. Ethanol production during the final quarter of the year is still expected to be a bit smaller than that of last summer. The projection of exports was reduced by 50 million bushels, to a total of 1.65 billion, reflecting the recent slowdown in the export pace and increased competition from Brazilian corn. While the estimated size of the 2012 Argentine crop was reduced by about 20 million bushels, the estimated size of the Brazilian harvest was increased by nearly 80 million bushels. Brazil is expected to export about 470 million bushels of corn. No changes were made to the projections of the domestic supply, consumption, stocks, and price for the 2012-13 marketing year. Year ending stocks are expected to grow from 851 million bushels this year to 1,881 billion next year. The projected size of the upcoming Chinese harvest was increased by nearly 80 million bushels in spite of reports of less than ideal growing conditions. The larger forecast reflected a larger projection of harvested acreage.

Wheat

For the marketing year ended May 31, the estimate of domestic food use was increased by 10 million bushels and the estimate of U.S. exports was increased by 30 million bushels, to a total of 1.055 billion bushels. The estimate of exports is larger than expected based on export inspections and Census Bureau estimates through April. Year ending stocks are projected at 728 million bushels, 40 million smaller than the May forecast.

For the current marketing year, the projected size of the winter wheat crop was reduced by 10 million bushels and the projection of feed and residual use of wheat was also reduced by 10 million bushels. Year-ending stocks are now projected at 694 million bushels and the marketing year average farm price is projected in a range of $5.60 to $6.80, $.10 higher than last month's projection. Stocks of wheat outside the U.S. are also expected to be reduced this year as a result of a 4.5 percent decline in production. The largest reductions in production are expected in Kazakhstan and the Ukraine.

Implications

The projections of small year-ending domestic stocks for corn and soybeans now put additional importance on the size of the 2012 harvest. The Grain Stocks and Acreage reports to be released on June 29 will provide a chance to re-evaluate the stocks and production situation, but the main focus will continue to be on yield prospects. On-going stressful weather in substantial portions of the corn and soybean growing areas and declining crop condition ratings are cause for concern, but the markets continue to reflect very high yield expectations. Unless the weather pattern in central and eastern growing areas changes, prices may have to start reflecting more production risk.

Issued by Darrel Good
Department of Agricultural and Consumer Economics
University of Illinois

Electrolytes are important but should be fed free choice as a loose salt mineral mix or top dressed in grain. If electrolytes are given in the water, horses may drink less. Anything that reduces water intake puts horses at risk.

Shade is helpful and air movement is especially useful. Fans, especially window box fans, are often hung on stall fronts to move air directly on horses. It also helps keep flies off. Aisle-way fans are less useful because it is difficult to get air movement in the stall where it is needed.

Be sure the horse cannot reach the fan or the electrical cords supplying the fans. Electrocution deaths as a result of a horse chewing on an electrical cord are fairly common. While there are usually breakers or fuses that will shut the power off, fires can result from malfunctioning fans in barns.

With stabled horses, keep stalls clean. Urine-soaked bedding and manure ferment more rapidly in hot humid weather. Fermentation produces both heat and ammonia, which increase the risk for lung disease. Picking stalls out once or even twice a day will reduce both problems.

Try to work horses early in the morning. This takes advantage of the cooler part of the day, plus gives the horse time to normalize its body temperature. Watch for signs of a medical emergency: weakness, labored breathing, cessation of sweating, or other signs of distress. Call a veterinarian, get the horse in shade, use fans and bathe with cold water. Bathe the head, underside of neck, inside of legs, and the entire body. Research at the Georgia Olympics in 1996 proved that ice water in large volumes could reduce temperatures safely without risk.

Be careful out there!

Written by: Dr. Dean Scoggins, Equine Extension Veterinarian, Veterinary Continuing Education/Public Service-Extension, University of Illinois at Urbana-Champaign

Machinery Cost Estimates for 2012 and 2013

Every two years, the costs of machinery operations are calculated and made available on farmdoc. The 2012 costs now are available under the "Machinery Costs" link in the farmdoc Management section. Overall, costs have increased by about 15 percent between 2010 and 2012. In our estimates, combine costs have declined between 2010 and 2012 because acres covered with the combine are assumed to increase in 2012.

Table 1 shows per acre costs for 2010 and 2012 for selected operations. As can be seen, chisel plowing costs increase from $12.80 per acre in 2010 up to $14.50 per acre in 2012, an increase of 13 percent. Field cultivating costs increase by 11 percent (from $8.80 per acre to $9.80 per acre) and planting costs increase by 14 percent (from $11.10 per acre up to $12.70 per acre).

Several factors influence machinery cost changes between 2010 and 2012:

Machinery prices have increased: Prices of new machinery have increased for most machines between 2010 and 2012. For example, the list price of a 215 horsepower tractor in 2012 is $215,000. A comparable sized tractor in 2010 has a list price of $181,500. Between 2010 and 2012, the price of this tractor has increased by 18 percent. The impact of price increases is to increase machinery costs.

Interest rates have declined: When calculating 2010 costs, a 6 percent interest rate is used. A 5 percent interest rate is used in calculating 2012 costs. The impact of an interest rate decline is to reduce machinery costs.

Fuel prices have increased: A $2.80 per gallon diesel fuel price is used in calculating costs in 2010. A $3.50 per gallon price is used for calculating 2012 costs. The impact of a fuel price increase is to increase in machinery costs.

Labor prices have increased: A labor charge of $16 per hour is used in 2010 and a $17 per hour charge is used in 2012. The impact of the increase in labor charge was to increase machinery costs.Combining costs are estimated at $35.80 in 2010. The 2012 cost is $33.70 per acre. Combining costs have declined because acres covered by a combine are increased. In 2010, costs are estimated using 1,400 acres were combined. In 2012, costs are estimated given that 1,900 acres were combined. Use has a large impact on all costs.

Summary

Machinery costs generally have increased between 2010 and 2012. Estimated cost increases would have been larger had not interest rates declined. Machinery costs will increase in the future if interest costs begin to rise.

Issued by Gary Schnitkey
Department of Agricultural and Consumer Economics
University of Illinois