Agriculture will take any good news where it can get it. Yesterday’s World Agricultural Supply and Demand Estimates from USDA was less mundane than expected as it helped extend a small run up in corn futures when the ag agency actually trimmed the U.S. harvest. According to agrimoney.com, futures for December hit the highest level it has seen and the closest it’s been to $4 per bushel since last August. This should help improve the outlook for cash receipts somewhat and, hopefully, give a boost to farm equipment sales.
USDA cut the domestic corn harvest by “68 million bushels, but still a record.” The agency is now forecasting a crop of 14.48 billion bushels.
This helped stabilize corn pricing, but didn’t do a lot to improve overall cash receipts. Expected yield per acre is forecasted at 173.4 bushels per acre compared with 174.2 in the October forecast, still well above the 158.8 yield from last year's harvest. USDA raised the 2014-15 season average price of corn by $0.10 on each end to a new range of $3.20-$3.80, up from $3.10-$3.70 in the previous month.
November USDA projections for 2014-15 soybean production was up slightly at 3.96 billion bushels vs. 3.93 billion in October, with yields moving up slightly to 47.5 bushels per acre, compared with 47.1 in the October forecast. USDA didn’t change its October forecast for the season average price for soybeans, leaving it in the $9-$11 range. U.S. wheat production estimate for the new marketing year of 2.026 billion bushels came in slightly below the prior month's 2.035 billion estimate. Projected yield per harvested acre ticks down slightly to 43.7 bushels per acre compared to 43.8 last month. The projected 2014-15 season average farm price for wheat narrows to $5.65-$6.15 compared to $5.55-$6.25 last month.
“The WASDE report is relevant to ag machinery names in that it helps predict crop cash receipts, the best leading indicator for ag machinery sales, including irrigation,” S. Schon Williams, analyst for BB&T Capital Markets, said in a note following the release of the WASDE report. “Based on the latest WASDE release, our estimates now indicate that farm cash receipts will be down 15.3% year-over-year vs. -16.6% last month during the 2014-15 growing season.”
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