USDA: Corn endings stocks drop as soybean, meal prices fall

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Feed crop report brings smaller corn yield drops than expected, and a bleak picture for US spring wheat, says economist.

Details of feed crop production and trade were released Thursday, August 10 in the most recent World Agricultural Supply and Demand report from the US Department of Agriculture (USDA).

Some of the areas of interest in the most recent report include details on wheat production, spring wheat yield and the anticipated corn yield amounts, said Joseph Janzen, assistant professor in the department of agricultural economics and economics at Montana State University.

Although the overall expectation for corn yield by acre fell, the predictions were that it would be further reduced, he said.

“The trade was guessing a number lower than 169 and that’s why the market is down today,” he told FeedNavigator. “The market thought we would be a little shorter than we were.”

However, there could continue to be changes coming from this year’s corn crop, he said. “There is still lots of time for that corn yield number to change,” he added.

Production numbers for wheat also dropped, but by less than some may have anticipated, said Janzen. “That wheat decline was worked into previous numbers so we’re not seeing that quite as much.”

“Spring wheat production is down [and] exports are down,” he said. However, the market also dropped in reaction to the report, he added.

“We sort of had an idea that we were going to be short in spring wheat, and looking at Canadian numbers, and that number was revised a little bit, but not a lot, but the other big thing is the Russian crop,” he said. “They are expected to have another record crop. They’ve been ramping up production year-over-year – and it looks like they’ll have another one this year – that’s going to weigh on the wheat market in general.”

Corn and coarse grain conditions

US corn production has been reduced, with production forecast to be 14.2bn bushels, a drop of 102m bushels from July, said the USDA. The first survey-based corn yield forecast is set at 169.5 bushels an acre, a drop from previous expectation.

Several states including South Dakota, Iowa, Minnesota and Illinois are expected to have smaller yields than a year ago, the department said. Indiana is similar to last year and Nebraska and Ohio are expected to see improvement.

Feed and residual use for 2017/18 was dropped 25m bushels from the smaller crop and exports also shrank based on increased competition from Brazil and Argentina, the department said. However, ending stocks dropped as supplies are dwindling faster than use.

Season average corn price range is unchanged at $2.90 to $3.70 a bushel, the department said.

Production for corn and barley in the EU have been reduced and Canada’s corn crop predictions also have been trimmed, the USDA said. But Russian production of barley and corn is predicted to increase.

Brazil’s second crop corn production and exports have been increased, the department said.

Export reductions are anticipated for the EU, Serbia and Canada with offsets by the Ukraine and Russia, the department said. Imports were increased based on the EU and Iran and foreign ending stocks have been increased from last month.

Sorghum production was up 13m bushels overall with yields rising 2.6 bushels per acre from last month’s projections, the department said.

Soy specifics

US oilseed production for 2017/18 has been increased to 130.9m tons, mainly on soybean production, said the USDA. Soybeans are expected to reach 4.38bn bushels from higher yields.

“The first survey-based soybean yield forecast of 49.4 bushels per acre is 1.4 bushels above last month but 2.7 below last year’s record,” the department said. Supplies for 2017/18 have been increased 2%, it added.

Exports increased by 75m bushels with larger supplies and reduced prices, the department said. Crush has dropped and ending stocks were raised.

The season average price for 2017/18 has been lowered to a range of $8.45 to $10.15 per bushel and meal fell to $295 to $335 per short ton, the department said.

“US changes for 2016/17 include higher exports, lower crush, and lower ending stocks,” said the USDA. “Soybean exports are raised 50m bushels to 2,150m on outstanding export sales and shipments through July. With lower crush only partly offsetting higher exports, ending stocks are projected at 370m bushels, down 40m from last month.”

Global production for 2017/18 has been increased, although soybean and canola production has been reduced for Canada based on dry conditions in the Canadian Prairies reducing yield, said the department.

Globally, exports for soybeans are expected to be up, the department said. Beginning stocks for 2017/18 have been increased and ending stocks also were raised.

Wheat markets

In areas across the Northern Plains, including Montana, there may not be much spring wheat to harvest, said Janzen.

“Some of the crop will be worth putting into the food market, but where you have areas that are badly hit by drought the wheat isn’t going to get harvested,” he said.

“For this year’s crop the writing is on the wall, we’re approaching the heart of the harvest season and there isn’t much alleviation,” he said. “The hope is there will be a moisture event between now and next spring that gets us in a better place.”

Looking forward there is interest in following wheat production amounts from Canada as they are seeing dry conditions, he said.

Wheat supplies were down 21m bushels from July, said the USDA. Amounts of durum and other spring wheat show a “significant decline” from last year based on drought conditions.

However, there was an increase in winter wheat production based on yield, the department said. Ending stocks for 2017/18 were lowered 5m bushels and the season average farm price remains unchanged.

Global wheat supplies are forecast to increase with a production bump from the Former Soviet Union region, the department said. Canadian wheat however was reduced 1.9m tons from increasing drought conditions.

Global trade is expected to increase with more exports from Russia, Ukraine and Kazakhstan, said the department. Projected ending stocks were raised to 264.7m tons.

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