The USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on Monday.
Yield predictions for US corn crop were lowered for 2016/17 to 15.09bn bushels, the department said. However, the soybean crop is expected to offer a record yield with an average of 50.6 bushels an acre.
The yield changes were the surprises in the report, said Matthew Roberts, associate professor in the department of agricultural, environmental and development economics at the Ohio State University.
There was some expectation the yield reduction for corn would be larger while the soybean yield was higher than expected, he said.
Soybean “prices are off about $0.15 across all maturities,” Roberts told FeedNavigator. “It’s an indication of what the market expected the yield estimates to be, I think they were expecting unchanged, or, at worst, not going to over 50.5 bushels and they [the USDA] projected 50.6 bushels.”
Corn down
Overall corn production is expected to drop along with feed and residual use, said the USDA. Prices are predicted to see some increase.
“The projected range for the season-average corn prices received by producers is raised $0.05 on both ends to $2.90 to $3.50 per bushel,” the department said.
There was an expectation that the yield would see a dip as the growing season was not ideal across the US, said Todd Davis assistant extension professor of agricultural economics with the University of Kentucky.
The amount can continue to change throughout the harvest, he said. October should bring more solid numbers and may indicate where the bottom is for the corn market.
“I remind farmers that this export window might be narrow,” said Davis. “They [Argentina and Brazil] start to harvest in February – you’d expect some of [the export market] to switch to more competitive prices.”
Supplies of corn for 2016/17 were reduced, to a still record-setting 16.86bn bushels and ending stock predictions were curbed, said the USDA. Feed and residual use was lowered for 2016/17, but export expectations remain consistent.
Farmer profits
It appears that some US producers may have difficulties meeting a breakeven price for the feed crop, said Roberts.
“A good rule of thumb is $3.60-3.75 on corn,” he said. “And those are the kind of numbers we need to see break even, and we don’t see those.”
Globally, corn production and exports in Brazil are expected to increase based on good prices while production is set to fall in the EU and China, said the USDA. China also is expected to have increased imports.
Ending stocks for foreign corn have been reduced by 0.7 tons, the department said.
Soybeans specifics
US soybean production is expected to be a record, at 4,201m bushels, based on higher yield, said the USDA.
Although higher crush and exports are predicted, ending stocks for 2016/17 have been increased by 35m bushels to 365m bushels, the department said.
“The US season-average soybean price is forecast at $8.30 to $9.80 per bushel, down $0.05 on both ends of the range,” said the department. “Soybean meal prices are also projected lower at $300 to $340 a short ton, down $5 on both ends of the range.”
Breakeven price for soybean producers in Western Kentucky can be around $9.80, depending on practices and region, said Davis. “The market provided opportunities through forward contracting of $11.30 which should have been above [cost],” he added.
“One thing crop growers need to do is have a good understanding of their basic costs,” he said. “There are costs to storage, especially if it is off farm.”
Global production for 2016/17 has been increased to 544.5m tons, said USDA. A reduction in soybean production expectations for Brazil, India and Canada have been balanced by yields in the US and China.
Oilseed trade for 2016/17 has been lowered with reduced imports for China and limited exports from Brazil and Canada, the department said. Total oilseed stocks are predicted to increase for 2016/17.
Wheat and feed grains
US domestic wheat supply and demand remained consistent for 2016/17, said the USDA. The marketing year average price was dropped to a range of $3.30-3.90.
Global supplies were increased based on production from India, Kazakhstan, Australia, Brazil and Canada offsetting production decreases for the EU and China, said the department. Supplies for 2016/17 were increased by 0.4m tons and ending stocks were lowered by 3.8m tons.
World exports were increased by2.1m tons, the department said. Usage also was raised for both feed and food.
Sorghum production is predicted to increase by 14m bushels beyond past estimates for 2016/17, said the department. But, prices are expected to average $2.75 to $3.35 – an increase on each end.
A decrease in feed grain for 2016/17 is predicted, said the department, but amounts should remain above the records set in 2014/15. “The 2016/17 foreign course grain outlook is for lower production, slightly higher consumption, larger trade, and reduced stocks relative to last month,” it added.