The US Department of Agriculture (USDA) released its April WASDE report yesterday. It said expectations are corn will also likely see a jump in stock levels. Although, ending stocks for soybeans have been reduced.
Lower feed demand for corn and wheat may be contributing to the decrease in usage and increased stock levels, said Chad Hart, associate professor of economics and crop markets specialist and extension economist at Iowa State University.
“There was the step down in feed demand and growth in the livestock industry,” he told FeedNavigator. “It’s trying to put those together that can be difficult – what the livestock industry has learned to do was create low cost rations and move between feedstuffs based on pricing.”
High prices for traditional feed ingredients in previous years have made producers search for alternative products that they may continue to use even as prices drop, he said. Additionally, the strong dollar continues to create difficulties for the export market.
Continued low feed crop prices may bring problems for farmers in the fall, said David Bau, extension educator in agricultural business management at the University of Minnesota. Current prices mean that producers already may be operating at a loss per acre.
“There’s already a few [growers] going out of business,” he said. “If prices don’t improve, and prices stay where they are it’s going to change the economics out here quite a bit.”
Corn and soy
US feed ending stocks for 2015/16 have been boosted for corn, barley and oats, based on disappearance and intended acreage, said the USDA. Corn ending stocks have been increased by 25m bushels.
Feed and residual use of corn is expected to drop by 50m bushels based on indicated disappearance from the first half of the marketing year, reported the agency. However, corn use in ethanol has been improved.
“The projected season-average farm price for corn is lowered 5 cents at the midpoint to $3.55 per bushel, with the range lowered 10 cents on the high end,” said the USDA.
However, said Hart, the corn market may not have found its bottom yet.
“We continue to see that market soften a bit,” he said. “It’s a market that’s also set up, given the acreage report from March, to see another large crop – if that acreage comes to fruition [we] could have a tremendous corn supply.”
Corn prices at the moment may also be benefitting from ongoing concerns about the weather as there may be a shift from the El Nino cycle to a La Nina weather pattern, said Hart.
“The weather uncertainly helps hold the prices a little higher, because we don’t know what that weather cycle is going to do and it can move very quickly and have an impact on this year’s crop,” he said. “It’s creating a little upside potential and underlying volatility as looking at the market.”
The next aspect to watch will be to see how quickly the new crop is planted, he said. “As the planting process slows what historically happens is you see less corn acres planted than intended and more planting of other crops.”
Changes for domestic use of soybean in 2015/16 include improved exports, reduced planting and lower ending stocks, said the USDA. Exports are up by 15m bushels based on imports by China, Iran, Bangladesh and Mexico.
Ending stocks are projected down 15m bushels to 445m bushels, the agency said.
Wheat and sorghum
US ending stocks for wheat have been increased based on a reduced feed and residual use, said the USDA. The expected season-average farm price has been dropped by $0.10 on the high end to $4.90.
Sorghum feed and residual use also has been lowered, the agency said. Feed use is down 15m bushels, although food, seed and industrial use is set to be up 25m bushels.
The farm price range has dropped $0.10 at the midpoint to $3.20 a bushel, it said.
International look
Global 2015/16 supplies of wheat also have been increased based on record production, said the USDA. Ending stocks have been raised by 1.7m tons to 239.3m tons.
EU production was increased by 1.5m tons and Argentina has been increased by 0.3m tons, reported the agency. However, there was a drop in production for Ethiopia and Pakistan.
World exports have been increased to 163.1m tons and expected consumption has been reduced for both feed and food use, it said. But corn imports are down for the EU based on competition from wheat supplies.
Ending stocks for the global corn supply are expected to be 1.9m tons higher, said the USDA.
Global corn production has been increased by 1m tons for Argentina, and it has been raised by 1.7m tons for the 2014/15 year, said the USDA.
Sorghum production has been reduced by 3.1m tons for Sudan and 1.2m tons for Ethiopia, said the agency.
Global soybean ending stocks are expected to be up 0.2m tons to 79m tons, said the USDA. Production remains consistent as improvements in Argentina offset declines in India.
Oilseed trade is expected to increase to 150.8m tons based mainly on soybeans, said the agency. And, soybean imports have been increased to China and other countries including Iran, Japan, Bangladesh and Mexico.
The USDA has reviewed global weather patterns for March and their impact on crop production. It can be read here.