February WASDE Friendly for Grains

Posted on 03/09/2017 10:18 AM
USDA's annual update on farmland values

Market reaction

Ahead of USDA's reports, corn and soybean futures were trading narrowly mixed, with old-crop contracts fractionally higher and new-crop contracts mildly weaker. Winter wheat futures were 1 to 2 cents higher and spring wheat futures were 5 to 7 cents higher. Cotton futures were 65 to 75 points higher.

Following the S&D update, corn is trading nearly unchanged, beans are 5 to 7 cents lower, winter and spring wheat futures are 5 to 7 cents higher, and cotton is up 25 to 35 points.

Pro Farmer Editor Brian Grete reacts:

U.S. carryover

Corn: 2.320 billion bu. for 2016-17; down from 2.355 billion bu. in January
Beans: 420 million bu. for 2016-17; unch. from 420 million bu. in January
Wheat: 1.139 billion bu. for 2016-17; down from 1.186
billion bu. in January
Cotton: 4.800 million bales for 2016-17; down from 5.000 million bales in January

USDA cut expected 2016-17 corn carryover by 35 million bu. from last month. That puts USDA's estimate about 20 million bu. below the average pre-report trade guess. It made no changes on the supply-side of the balance sheet. On the demand side, USDA added 35 million bu. to expected food, seed and industrial use, pushing the tally up to 6.795 billion bushels. Of that increase, 25 million bushels were tagged on to expected corn-for-ethanol use (5.350 billion bushels). USDA now puts the projected national average on-farm cash corn price at $3.20 (up a dime from last month) to $3.60 (down a dime from January).

Soybean carryover is unchanged from last month. That puts USDA's estimate about 10 million bu. above the average pre-report trade estimate. No changes were made on the supply- or demand-side of the balance sheet. USDA now puts the projected national average on-farm cash bean price at $9.10 (up a dime from January) to $9.90 (down a dime from last month).

USDA cut expected 2016-17 wheat carryover by 45 million bushels from last month. That puts USDA's estimate about 40 million bu. below the average pre-report trade guess. No changes were made on the supply-side of the balance sheet. On the demand side, USDA cut estimated food use by 3 million bu. (to 960 million bu.) and increased estimated exports by an unexpected 50 million bushels. That pushes expected 2016-17 wheat exports up to 1.025 billion bushels. USDA estimates the national average on-farm cash wheat price at $3.80 to $3.90, up a nickel on both ends of the range from last month.

Cotton carryover is down 200,000 bales from last month, which is right in line with trade expectations. USDA increased estimated 2016-17 cotton exports by 200,000 bales (to 12.7 million bales), accounting for the full cut to carryover. USDA now puts the projected national average cotton price at 67 cents to 71 cents, up 2 cents on both ends of the range from last month.

 

Global carryover

Corn: 217.56 for 2016-17; down from 220.98 MMT in January
-- compares to 210.39 MMT in 2015-16

Beans: 80.38 MMT for 2016-17; down from 82.32 MMT in January
-- compares to 77.19 MMT in 2015-16
Wheat: 248.61 MMT for 2016-17; down from 253.29 MMT in January
-- compares to 240.77 MMT in 2015-16
Cotton: 89.90 million bales for 2016-17; down from 90.65 million bales in January

-- compares to 96.83 million bales in 2015-16

Despite a recent steep downside adjustments by the European Union to existing corn stocks, USDA cut estimated EU corn carryover by just 270,000 metric tons. That resulted in a bigger global corn carryover estimate than some market-watchers expected.

 

Global production highlights

Argentina beans: 55.5 MMT for 2016-17; compares to 57.0 MMT in January
-- compares to 56.8 MMT in 2015-16
Brazil beans: 104.0 MMT for 2016-17; compares to 104.0 MMT in January
-- compares to 96.5 MMT in 2015-16
Argentina wheat: 15.0 MMT for 2016-17; compares to 15.0 MMT in January
-- compares to 11.3 MMT in 2015-16
Australia wheat: 33.0 MMT for 2016-17; compares to 33.0 MMT in January
-- compares to 24.5 MMT in 2015-16
China wheat: 128.85 MMT for 2016-17; compares to 128.85 MMT in January
-- compares to 130.19 MMT in 2015-16
Canada wheat: 31.7 MMT for 2016-17; compares to 31.7 MMT in January
-- compares to 27.59 MMT in 2015-16
EU wheat: 144.86 MMT for 2016-17; compares to 144.32 MMT in January
-- compares to 160.0 MMT in 2015-16
FSU-12 wheat: 130.22 MMT for 2016-17; compares to 131.93 MMT in January
-- compares to 118.24 MMT in 2015-16

Russia wheat: 72.5 MMT for 2016-17; compares to 72.5 MMT in January
-- compares to 61.04 MMT in 2015-16
China corn: 219.55 MMT for 2016-17; compares to 219.55 MMT in January
-- compares to 224.63 MMT in 2015-16
Argentina corn: 36.5 MMT for 2016-17; compares to 36.5 MMT in January
-- compares to 29.0 MMT in 2015-16
South Africa corn: 13.0 MMT for 2016-17; compares to 13.0 MMT in January
-- compares to 7.9 MMT in 2015-16
Brazil corn: 86.5 MMT for 2016-17; compares to 86.5 MMT in January
-- compares to 67.0 MMT in 2015-16
China cotton: 22.5 mil. bales for 2016-17; compares to 22.0 mil. bales in January
-- compares to 22.0 mil. bales in 2015-16

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