Thursday’s World Agricultural Supply and Demand Estimates (WASDE) released by the US Department of Agriculture (USDA) showed some positive areas for soybeans and wheat, but was not as favorable for corn, said David Bau, extension educator in agricultural business management at the University of Minnesota.
“The lower [soybean] yields surprised,” he told us. The expectation was that production for feed crops would increase, but instead corn and soybeans dropped, he added.
However, the budgeting process for 2017 may make producers likely to increase acres of soybeans planted, while potentially maintaining corn and dropping wheat fields, he said. “Corn has always been king – but doing budgets, looking forward to 2017, corn is a lot less profitable than beans,” he added.
Crop prices also may not see much improvement if the dollar continues to be strong, he said.
“We have a really big inventory of corn, so there isn’t a big opportunity for that to take off either,” said Bau. “The soybean exports are good, but now we’re coming to the point when South American exports are going to take over.”
Corn and soybean fluctuations
The outlook for US corn in 2016/17 sees reduced production, a drop in feed and residual use and smaller stocks, said the USDA. Corn production is set at 15.148bn bushels, a drop of 78m from last month based on reduced area harvested and a drop in yield to 174.6b an acre.
Imports were increased, the department said. However, feed and residual use was lowered by 50m bushels to 5,600m from the reduced crop, increased use of sorghum in feed and indicated disappearance.
Globally, corn production has been increased in certain regions such as Serbia, but is partially offset by a drought in Bolivia reducing production, the department said. India also is expected to export less corn.
“Foreign corn ending stocks are virtually unchanged from last month, with reduction for Indonesia, Mexico and the EU offset by an increase for Canada,” said the USDA.
US soybean production dropped 54m bushels from previous estimates based on crop yield and a decline in area harvested, said the department. But it remains at a record 4.3bn bushels.
“Soybean supplies are down 60m bushels on lower production and imports,” the department said. “With exports and crush unchanged, ending stocks are projected at 420m bushels, down 60m from last month.”
The rate of soybean meal production was lowered, although the crush rate continued unchanged, the department said. “Soybean meal exports are also reduced on lagging sales,” it added.
“The 2016/17 US season-average farm price forecast for soybeans is projected at $9 to $10 per bushel, from $8.70 to 10.20, up $0.05 at the midpoint,” said the USDA. “The soybean meal price forecast is unchanged at $305 to $345 per short ton.”
Global soybean production is down - larger amounts in Brazil and China were evaluated against reductions from Bolivia, Uruguay and the US, said the US agency. “The largest change to production is a 2m ton increase for Brazil, where beneficial rain has resulted in improved yield prospects,” it added.
Wheat stocks and coarse grains
The ending stocks for wheat saw an increase from what was previously expected, reaching a level last seen in the 1980s, said the USDA. The feed and residual use was dropped by 35m bushels.
However, seed use also is down by about 8m bushels based on the area planted with winter wheat, said the department.
Wheat supplies globally for 2016/17 were increased by about 1.3m tons stemming from a production increase in areas including Argentina, Russia and the EU.
Global wheat exports were raised by 1.2m tons owning to Argentina, Australia and the EU, according to the USDA. However, a drop in exports from Canada acts as a partial offset, it forecast.
Overall, wheat use saw an increase of 0.1m tons, although feed and residual use expectations were lowered. “With total global supplies increasing faster than use, ending stocks are increased 1.2m tons to a new record of 253.3m,” reported the USDA.
US production of sorghum for 2016/17 was increased by 18m bushes based on the area harvested and yield, said the US agency. Average prices were lowered at the midpoint by $0.15 to a range of $2.65 to $3.15 per bushel.
Barley production in Russia and Argentina has been reduced, said the USDA.
The global oilseed supply is seeing increased production and exports, said the department. Production growth is based on cottonseed, rapeseed and sunflower seed. Canada saw reduced rapeseed exports but increased crush.