The USDA issued its monthly update to its World Agricultural Supply and Demand Estimates (WASDE) for the 2010-11 crop year last Friday (July 9). Overall, the report is viewed as a positive for the sale of farm machinery.
Following the June acreage report from the previous week, USDA revised the 2010-11 ending corn inventories down to 1.37 billion bushels, from 1.57 billion bushels. This was 8% above analysts’ projections of 1.27 billion bushels.
USDA also raised its corn price outlook to $3.75/bushel, from $3.60.
The ag agency left its soybean inventory outlook mostly unchanged from the
June WASDE report, but revised its soybean price outlook higher to $8.85/bushel from $8.75. USDA also raised the midpoint price for wheat to $4.60/bushel from $4.40/bushel.
“We now expect total major crop receipts — corn, wheat and soybeans — for
2010-11 to be flat year-over-year, at $95.8 billion, vs. our previous expectation of $92.5 billion, which was down 3% year-over-year,” Ann Duignan, analyst for JP Morgan said in a note to investors.
Henry Kirn, machinery analyst for UBS, also expects farm profitability to remain solid for the remainder of this year. “Although down from the prior year, we note that corn, soybean and wheat prices remain well above historical averages, and farmers are expected to remain profitable in 2010.”
USDA has forecasted farm cash net income to increase 8% year-over-year in 2010.
Source: Ag Equipment Intelligence