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Your Guide To Understanding The USDA World Agriculture Supply & Demand Estimates For Corn, Soybeans And Wheat
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Futures Guide to the WASDE TurnerTraders Breakout Reversal (TBR) What Is The WASDE?
The World Agricultural Supply and Demand Estimates (WASDE) report provides the USDAs comprehensive forecasts of supply and demand for crops (US and global) and livestock (US only). The report gathers information from a number of statistical reports published by USDA and other government agencies, and provides a framework for additional USDA reports. The USDAs home page for the WASDE may be found here:
http://www.usda.gov/oce/commodity/wasde/
As you read through this guide, you may want to have a copy of the WASDE report handy. When you click on the above link, you will be able to download the latest version of the WASDE or access one of the archived reports. You may also access the most current WASDE report via this web link:
http://www.usda.gov/oce/commodity/wasde/latest.pdf
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Supply Side:
The most important metric for the Supply Side is Production. Production is the amount of corn we grow in a given year. To find this out take the Area Harvested and multiply it by the Yield per Harvested Acres.
If we look at 2010-11 corn below (2nd column), we see the Area Harvested is 81.4 Million Acres and the yield is 152.8. 152.8 X 81.4 Million Acres is how the USDA gets the 12447 Production in the 4th row of the table.
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The Total Supply for each year is going to be the sum total of the Beginning Stocks (last years ending stocks), Production (this years Harvested Acres X Yield), and Imports, which is corn that the US imports from other countries. The sum of these three inputs represents the total supply of corn in the US for any given year.
Demand Side:
Now that we know the Total Supply, we need to also understand the Demand side, which is also known as Total Use. To find the Total Use we need to know the Feed and Residual, Food, Seed & Industrial, and Exports. Domestic Use is the sum of Feed & Residual and Food, Seed and Industrial (FS&I). You DO NOT add back the Ethanol usage. Ethanol is already included in FS&I. Feed & Residual mainly comprises of the corn used for Livestock feed. FS&I represent the corn we use for food, seed for the next crop, and ethanol.
After we get Domestic Use, we can then move on to Exports. This row is for all corn the US sells overseas. Finally, we now have the numbers needed for Total Use.
Total Use = Feed & Residual + Food, Seed & Industrial + Exports
The most important number in each column is Ending Stocks. Ending Stocks shows how many millions of bushels of Corn we have at the end of the year and how much we carry over to the next year.
One very important metric that traders use but is not on the WASDE report is Stock to Use Ratio. This ratio gives us an idea of the how the ending stocks stack up to total demand. To get the Stocks to Use, just divide the Ending Stocks by the Total Use. In 2010/2011 the stock to use was 1128 Ending Stocks divided by 13055 Total Use, which is an 8.64% stock to use percentage.
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CORN
2010/2011
2011/12 EST.
88.2 81.4
91.9 84
95.9 * 89.1 *
96.4 * 88.9 *
Bushels
Yield per Harvested Acre 152.8 147.2 166.0 * 146.0 *
Million Bushels
Beginning Stocks Production Imports Supply, Total Feed and Residual Food, Seed & Industrial Ethanol & by-products Domestic, Total Exports Use, Total Ending Stocks CCC Inventory Free Stocks Outstanding Loans Avg. Farm Price ($/bu) 1708 12447 28 14182 4793 6428 5021 11220 1835 13055 1128 0 1128 48 5.18 1128 12358 22 13508 4550 6455 5050 11005 1600 12605 903 0 903 100 6.10 - 6.30 4.20 - 5.00 5.40 - 6.40 851 14790 15 15656 5450 6425 5000 11875 1900 13775 1881 903 12970 30 13903 4800 6320 4900 11120 1600 12720 1183
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Futures Guide to the WASDE TurnerTraders Breakout Reversal (TBR) Soybeans Balance Sheet
The Soybean Balance sheet may be found on Page 15 of the WASDE. The soybean balance sheet is very similar to the corn balance sheet. Once you learn how to read one of the Balance Sheets, the learning the rest becomes much easier. Just like with Corn, the first half of the Balance Sheet is about Supply and the second is about Demand (Use).
Supply Side:
On the Supply Side, Production is equal to Area Harvested multiplied by Yield per Harvested Acre. Total Supply is Production plus Beginning Stocks plus Imports
Production = Area Harvested X Yield per Acre Beginning Stocks = Last Years Ending Stocks Total Supply = Production + Beginning Stocks + Imports
Demand Side:
On the Demand Side, we need to find Crushings, Exports, Seed and Residual.
Crushings and Exports make up for the majority of Soybean use while Seed and Residual are more of an afterthought. Crushing use is derived from the demand for both soybean oil and soybean meal used in feed and human food products. Soybeans are crushed to separate out the oil from the protein and create crude soybean oil and soybean meal. Exports represent the soybeans that American producers send abroad. Seed represents the soybeans used for seeding future crops. Residual is what the USDA uses to make the numbers fit together. If there are Soybeans used and they cant account for it, the USDA puts them into the Residual classification. The last metrics to calculate are Ending Stocks and the Stocks to Use ratio.
Ending Stocks = Total Use Total Supply Stocks to Use = Ending Stocks / Total Use
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Bushels
43.9 * 40.5 **
Million Bushels
Beginning Stocks Production Imports Supply, Total Crushings Exports Seed Residual Use, Total Ending Stocks Avg. Farm Price ($/bu) 151 3329 14 3495 1648 1501 87 43 3280 215 11.3 215 3056 15 3286 1675 1340 88 13 3116 170 12.4 175 3205 15 3395 1645 1485 89 36 3255 140 12.00 - 14.00 170 3050 15 3235 1610 1370 89 35 3105 130 13.00 - 15.00
Supply Side:
Production = Area Harvested X Yield per Acre Beginning Stocks = Last Years Ending Stocks Total Supply = Production + Beginning Stocks + Imports
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Demand Side:
Domestic Use = Food + Seed + Feed & Residual Total Use = Domestic Use + Exports Ending Stocks = Total Use Total Supply Stocks to Use Ratio = Ending Stocks / Total Use
WHEAT
2010/2011
2011/12 EST.
53.6 47.6
54.4 45.7
55.9 * 49.2 *
56 48.8
Bushels
Yield per Harvested Acre 46.3 43.7 45.4 * 45.6
Million Bushels
Beginning Stocks Production Imports Supply, Total Food Seed Feed and Residual Domestic, Total Exports Use, Total Ending Stocks CCC Inventory Free Stocks Outstanding Loans Avg. Farm Price ($/bu) 976 2207 97 3279 926 71 132 1128 1289 2417 862 0 862 15 5.7 862 1999 115 2977 940 77 169 1186 1048 2234 743 0 743 10 7.24 5.60 - 6.80 6.20 - 7.40 728 2234 120 3082 945 73 220 1238 1150 2388 694 743 2224 120 3087 950 73 200 1223 1200 2423 664
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htm (7/15/2012)
USDA,How the WASDE Report is Prepared 6/15/2012, http://www.usda.gov/oce/commodity/wasde/prepared.
htm (7/15/2012)
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