Old- and New-Crop Corn and Cotton Carryover Lower Than Expected

Posted on 03/09/2017 10:22 AM

Market reaction

Ahead of USDA's reports, corn futures were trading 3 to 5 cents lower, soybeans were 13 to 16 cents higher, wheat was 3 to 4 cents lower and cotton was 10 to 30 points higher.

Following the report, corn is trading 3 to 5 cents higher, soybeans are 13 to 15 cents higher, wheat is mixed with SRW up 4 to 5 cents, HRW narrowly mixed and spring wheat about a penny higher. Cotton futures are 150 to 180 points higher.

Additional perspective from Pro Farmer Editor Brian Grete:

Wheat production

All wheat: 2.261 billion bu.; trade expected 2.159 billion bu.
-- compares to 2.077 billion bu. in June; 2.052 billion bu. in 2015
All winter wheat: 1.628 billion bu.; trade expected 1.543 billion bu.
-- compares to 1.507 billion bu. in June; 1.370 billion bu. in 2015
HRW: 1.034 billion bu.; trade expected 968 million bu.
-- compares to 938 million bu. in June; 827 million bu. in 2015
SRW: 370.1 million bu.; trade expected 355 million bu.
-- compares to 355 million bu. in June; 357 million bu. in 2015
White winter: 223.5 million bu.; trade expected 218 million bu.
-- compares to 214 million bu. in June; 184 million bu. in 2015
Other spring wheat: 550.5 million bu.; trade expected 550 million bu.
-- compares to 599 million bu. in 2015
Durum: 82.8 million bu.; trade expected 90 million bu.
-- compares to 82 million bu. in 2015

USDA now puts the national average all-wheat yield at a record 51.3 bu. per acre, up 2.7 bu. from the June projection. The all-winter wheat yield is put at a record 53.9 bu. per acre, up 3.4 bu. per acre from last month. Other spring wheat is expected to yield 46.5 bu. per acre, up 0.2 bu. from 2015. Durum wheat is expected to yield 39.8 bu. per acre, down 3.7 bu. from 2015.

2015-16 U.S. carryover

Corn: 1.701 billion bu.; down from June est. of 1.708 billion bu.
-- 2.081 billion bu. for 2016-17; compares to 2.008 billion bu. in June
Beans: 350 million bu.; down from June est. of 370 million bu.
-- 290 million bu. for 2016-17; compares to 260 million bu. in June
Wheat: 981 million bu.; up from June est. of 980 million bu.
-- 1.105 billion bu. for 2016-17; compares to 1.050 billion bu. in June
Cotton: 3.9 million bales; down from June est. of 4.1 million bales
-- 4.6 million bales for 2016-17; compares to 4.8 million bales in June

USDA's old-crop corn carryover estimate is 104 million bu. below the average pre-report trade estimate and is down 7 million bu. from last month. As expected, there was a lot of movement on the demand-side of the old-crop corn balance sheet with feed & residual use down 50 million bu. (to 5.2 billion) and food, seed & industrial use down 18 million bu. (to 6.592 billion bushels). Corn-for-ethanol use (part of FSI) was actually down 25 million bu. from last month (to 5.225 billion bu.), indicating a 7-million-bu. increase in "other" FSI use. More than offsetting these cuts to old-crop corn use was a 75-million-bu. increase in estimated exports, pushing the tally up to 1.9 billion bushels. USDA now puts the 2015-16 on-farm cash corn price at $3.60 to $3.70, steady on the bottom of the range from last month and down a dime on the top-end of the range.

The new-crop corn carryover is 124 million bu. below the average pre-report trade estimate and is up 73 million bu. from the June estimate. USDA increased total supplies by 103 million bu., the result of a bigger crop projection based on the June Acreage update. USDA also cut 50 million bu. from projected feed & residual use (5.5 billion bu.) and 20 million bu. from new-crop FSI use (to 6.65 billion bushels.) Corn-for-ethanol use in the 2016-17 marketing year is now put at 5.275 billion bu., down 25 million bu. from last month. That was all offset by a 100-million-bu. increase in projected exports, pushing the tally to 2.05 billion bushels. USDA now puts the 2016-17 on-farm cash corn price at $3.10 to $3.70, down a dime on both ends of the range from last month.

Old-crop soybean carryover is right in line with pre-report expectations and is down 20 million bushels from last month. On the supply-side, USDA lowered old-crop bean imports 5 million bu., to 25 million bushels. On the demand-side, USDA increased estimated exports 35 million bu., pushing the total to 1.795 billion bushels. Seed use was also increased 2 million bu. (97 million bu.), but old-crop residual use was cut 22 million bu., to a total of 12 million bushels. USDA left the 2015-16 on-farm cash soybean price at $9.05.

New-crop bean carryover also lined up with pre-report trade expectations. Total supplies were increased 60 million bu. with beginning stocks down 20 million bu. from last month and the crop projection up 80 million bu. to reflect the June Acreage Report. On the demand side, USDA increased projected crush 10 million bu. (to 1.925 billion bu.) and increased projected exports 20 million bu., to a total of 1.92 billion bushels. The national average on-farm cash soybean price for 2016-17 is steady with last month at $8.75 to $10.25.

On old-crop wheat, USDA made some minor adjustments to align 2015-16 wheat carryover with the June 1 stocks estimate of 981 million bushels. The old-crop national average on-farm cash wheat price was dropped a penny from last month, to $4.89.

USDA's new-crop wheat carryover forecast lines up with trade expectations and is up 55 million bu. from June. Total supplies for the 2016-17 marketing year are up 180 million bu. from last month, reflecting the bigger crop estimate. That increase in supplies was partially offset by a 100-million-bu. increase in projected wheat feed & residual use (to 300 million bu.) and a 25-million-bu. increase in exports (to 925 million bushels). USDA now puts the national average new-crop on-farm cash wheat price at $3.40 to $4.20, down 20 cents on both ends of the range from last month.

Old-crop cotton carryover is down 200,000 bales from last month with USDA's export estimate up 200,000 bales from June. USDA also trimmed total supplies by 10,000 bales, but offset that with a 10,000-bale cut to estimated unaccounted use. The old-crop national average cash cotton price was unchanged from last month at 58 cents.

USDA's new-crop cotton carryover of 4.6 million bales is down 200,000 bales from last month. USDA increased total supplies by 800,000 bales to reflect higher acreage in the June Acreage Report. USDA also increased projected 2016-17 cotton exports by 1 million bales, to 11.5 million bales. USDA puts the national average on-farm cash cotton price for 2016-17 at 52 cents (up a nickel) to 66 cents (down a penny from last month).

2015-16 global carryover

Corn: 206.90 MMT; up from June est. of 206.45 MMT
-- 208.39 for 2016-17; compares to 205.12 MMT in June
Beans: 72.17 MMT; down from June est. of 72.29 MMT
-- 67.10 MMT for 2016-17; compares to 66.31 MMT in June
Wheat: 244.52 MMT; up from June est. of 243.01 MMT
-- 253.70 MMT for 2016-17; compares to 257.84 MMT in June
Cotton: 100.27 mil. bales; down from June est. of 102.08 mil. bales
-- 99.29 million bales for 2016-17; compares to 94.73 million bales in June


2015-16 global production highlights

Argentina beans: 56.5 MMT; compares to 56.5 MMT in June
-- 57.0 MMT for 2016-17; compares to 57.0 MMT in June
Brazil beans: 96.5 MMT; compares to 97.0 MMT in June
-- 103.0 MMT for 2016-17; compares to 103.0 MMT in June
Argentina wheat: 11.3 MMT; compares to 11.3 MMT in June
-- 15.0 MMT for 2016-17; compares to 14.5 MMT in June
Australia wheat: 24.5 MMT; compares to 24.5 MMT in June
-- 25.5 MMT for 2016-17; compares to 25.0 MMT in June
China wheat: 130.19 MMT; compares to 130.19 MMT in June
-- 130.0 MMT for 2016-17; compares to 130.0 MMT in June
Canada wheat: 27.6 MMT; compares to 27.6 MMT in June
-- 29.0 MMT for 2016-17; compares to 28.5 MMT in June
EU wheat: 160.01 MMT; compares to 160.01 MMT in June
-- 156.5 MMT for 2016-17; compares to 157.5 MMT in June
Russia wheat: 61.04 MMT; compares to 61.04 MMT in June
-- 65.0 MMT for 2016-17; compares to 64.0 MMT in June
FSU-12 wheat: 117.72 MMT; compares to 117.60 MMT in June
-- 118.93 MMT for 2016-17; compares to 116.83 MMT in June
China corn: 224.58 MMT; compares to 224.58 MMT in June
-- 218.0 MMT for 2016-17; compares to 218.0 MMT in June
Argentina corn: 28.0 MMT; compares to 27.0 MMT in June
-- 34.0 MMT for 2016-17; compares to 34.0 MMT in June
South Africa corn: 6.5 MMT; compares to 6.5 MMT in June
-- 13.0 MMT for 2016-17; compares to 13.0 MMT in June
Brazil corn: 70.0 MMT; compares to 77.5 MMT in June
-- 80.0 MMT for 2016-17; compares to 82.0 MMT in June
China cotton: 22.5 mil. bales; compares to 22.5 mil. bales in June
-- 21.5 million bales for 2016-17; compares to 21.5 million bales in June

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