USDA Lowers Projected Corn & Soybean Production

Posted on 03/09/2017 10:19 AM


WHEAT: U.S. 2016/17 all wheat ending stocks are raised this month and projected to reach the highest level since the late 1980’s. Feed and residual use is lowered 35 million bushels reflecting disappearance for June-November as implied by the December 1 stocks estimated in the Grain Stocks report. Seed use is lowered 8 million bushels on the winter wheat planted area released today in the Winter Wheat and Canola Seedings report. Total supplies for 2016/17 are lowered fractionally on lower beginning stocks while 2016 production is unchanged. Projected ending stocks for 2016/17 are raised 43 million bushels. The season-average farm price is raised $0.10 at the midpoint to $3.80 on higher-than-expected cash prices to date. However, this season-average price would still be the lowest since 2005.

Global wheat supplies for 2016/17 are raised 1.3 million tons on a production increase that is only partially offset by lower beginning stocks. The largest increases are for Argentina, Russia, and the EU. Global exports are raised 1.2 million tons led by increases for Argentina, Australia, and the EU. Partly offsetting is a reduction in Canadian exports reflecting the slow shipment pace so far this year. Global use for 2016/17 is raised 0.1 million tons with increased food use partially offset by a reduction in feed and residual use. With total global supplies increasing faster than use, ending stocks are increased 1.2 million tons to a new record of 253.3 million.

COARSE GRAINS: This month’s 2016/17 U.S. corn outlook is for lower production, reduced feed and residual use, increased corn used to produce ethanol, and smaller stocks. Corn production is estimated at 15.148 billion bushels, down 78 million from last month on lower harvested area and a reduction in yield to 174.6 bushels per acre. Imports are raised based on the pace of corn imports through November. Feed and residual use is lowered 50 million bushels to 5,600 million based on the smaller crop, increased corn used to produce ethanol, greater sorghum feeding, and indicated disappearance during September-November as reflected by the December 1 stocks. Corn used to produce ethanol is raised 25 million bushels to 5,325 million based on the most recent data from the Grain Crushings and Co-Products Production report which estimated the amount of corn used to produce ethanol during September-November to be record high. With supply falling faster than use, corn ending stocks are lowered 48 million bushels from last month. The projected range for the season-average corn price received by producers is raised 5 cents on both ends to $3.10 to $3.70 per bushel.


Sorghum production for 2016/17 is estimated 18 million bushels higher on increases in both harvested area and yield. Grain sorghum prices are projected to average $2.65 to $3.15 per bushel, down 15 cents at the midpoint reflecting the weakening relationship to corn prices in interior markets.

Global coarse grain production for 2016/17 is forecast 1.7 million tons lower to 1,327.7 million. This month’s 2016/17 foreign coarse grain outlook is for marginally lower production, higher consumption, and increased trade relative to last month. Serbia corn production is raised reflecting the latest information from the Foreign Agricultural Service office in Belgrade. Partly offsetting is lower corn production for Bolivia where the impact of a severe drought during the growing season was worse than previously expected. Russia barley production is lowered based on the latest government statistics. Argentina barley production is lowered on dryness in southern Buenos Aires province during crop heading and grain fill in November and December.

Major global trade changes for 2016/17 this month include lower projected corn exports for India, more than offset by increases for Serbia and the EU. Imports are raised for Bolivia, but lowered for Indonesia. Foreign corn ending stocks are virtually unchanged from last month, with reductions for Indonesia, Mexico, and the EU offset by an increase for Canada.

OILSEEDS: U.S. oilseed production for 2016/17 is estimated at 127.3 million tons, down 1.5 million from last month. Lower soybean and peanut production is partly offset with higher canola, sunflowerseed, and cottonseed crops. Soybean production is estimated at a record 4,307 million bushels, down 54 million from last month on lower yields. Harvested area is estimated at 82.7 million acres, down 0.3 million from the previous forecast with lower planted area. Yield is estimated at a record 52.1 bushels per acre, down 0.4 bushels. Soybean supplies are down 60 million bushels on lower production and imports. With exports and crush unchanged, ending stocks are projected at 420 million bushels, down 60 million from last month. Although soybean crush is unchanged, soybean meal production is reduced on a lower extraction rate. Soybean meal exports are also reduced on lagging sales. Soybean oil balance sheet changes include increased production on a higher extraction rate, and increased ending stocks.


The 2016/17 U.S. season-average farm price forecast for soybeans is projected at $9.00 to $10.00 per bushel, from $8.70 to $10.20, up 5 cents at the midpoint. The soybean meal price forecast is unchanged at $305 to $345 per short ton. The soybean oil price forecast of 34 to 37 cents per pound is lowered 0.5 cents at the midpoint.

The 2016/17 global oilseeds supply and demand estimates include higher production and exports compared to last month. Oilseed production is projected up 0.1 million tons to 554.8 million on increases for cottonseed, rapeseed, and sunflowerseed partly offset by reductions for soybeans and peanuts. Soybean production is lowered 0.2 million tons as increases for Brazil and China are offset by declines in Bolivia, Uruguay, and the United States. The largest change to production is a 2.0-million-ton increase to 104.0 million for Brazil, where beneficial rain has resulted in improved yield prospects.

Global oilseed trade is projected at 160.3 million tons, up 0.4 million from last month. Increased soybean exports for Brazil more than offset lower soybean exports for Bolivia and Uruguay and lower rapeseed exports for Canada. Global oilseed crush is projected higher on increased soybean crush for Argentina and India and increased rapeseed crush for Canada. Global oilseed stocks are projected at 93.7 million tons, down 0.9 million, mainly on lower soybean stocks for the United States.

COTTON: The U.S. 2016/17 cotton outlook shows larger production, exports, and ending stocks relative to last month. Production is raised 435,000 bales to nearly 17.0 million, due mainly to higher production in Texas. Domestic mill use is unchanged, but exports are raised to 12.5 million bales and ending stocks to 5.0 million. The forecast range for the marketing year average price received by producers is narrowed 1 cent on each end to 65 to 69 cents per pound, with the midpoint unchanged at 67 cents.

Larger production is the main factor driving a 1.5-million-bale increase in projected global 2016/17 ending stocks. In addition to the increase for the United States, production is raised 1.0 million bales for China, where inspection data indicates higher production than previously anticipated for the Xinjiang region, partially offset by a decrease for Pakistan, which is based on ginning arrivals. Consumption is reduced for India, Mexico, and Turkey, mostly offset by an increase for China. World trade is raised slightly, due mainly to higher projected imports by Pakistan and Bangladesh. Higher exports are projected for the United States and India, partially offset by decreases for Uzbekistan and Australia. World ending stocks are now projected at 90.6 million bales.


LIVESTOCK, POULTRY, AND DAIRY: The estimate for total red meat and poultry production for 2016 is raised slightly from last month. Beef production is raised on increased fed cattle slaughter and heavier carcass weights. Pork production for 2016 is raised based on slaughter data. Broiler and turkey production for 2016 is slightly lower based on the recent slaughter. For 2017, red meat and poultry production is raised largely on higher forecast pork production, although forecasts of beef and broilers are raised. Higher expected cattle placements in late 2016 and early 2017 underpin higher forecast beef production in 2017. USDA will release its semi-annual Cattle report January 31 which will provide estimates of heifers held for breeding along with indications of the availability of cattle for placement during 2017. Pork production for 2017 is raised based on estimates from the December Quarterly Hogs and Pigs report. The 5 percent year-over-year increase in the September–November pig crop will be slaughtered largely in the second quarter of 2017. Producers indicated intentions to farrow 1 percent more sows in the first half of 2017 which, coupled with expected growth in pigs per litter, will support a higher level of slaughter during the second half of the year. Broiler production is raised for early 2017 on recent hatchery data, but the turkey production forecast is unchanged. Egg production for 2017 is raised slightly based on hatchery data.

Both beef and pork 2016 export estimates are raised based on November trade data and expectations of strong export demand in December. Beef imports are lowered, but no change is made to pork imports. Broiler and turkey exports are lowered on recent trade data. No change is made to the 2016 egg export estimate. For 2017, beef exports are raised as current demand strength is expected to carry into 2017. Imports are forecast higher on expectations of slightly larger supplies from Oceania in early 2017. No changes are made to pork, broiler, or turkey trade forecasts. The 2017 egg export forecast is raised on expectations of stronger sales in the first half of the year.

Livestock and poultry prices for 2016 are adjusted to reflect December price data. The 2017 cattle price forecast is increased on continued strong demand into the first part of 2017. The hog price forecast for first quarter 2017 is raised on demand strength, but price forecasts for subsequent quarters are lowered as hog supplies are expected to be large. Broiler prices are raised slightly on early-year demand strength. Turkey prices are forecast lower on relatively soft demand. Egg prices are increased.




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