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January USDA Supply & Demand and Quarterly Grain Stocks

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The USDA gave a friendly outlook for soybeans and wheat in today's report. They reduced the soybean harvested area by 300,000 acres and lowered the soybean yield by 0.4 bushels. Total soybean production was down 54 million bushels as a result. Soybean carryout came in at 420 million bushels, down 60 million bushels from last month, and 53 million bushels below the average trade guess.

The USDA made small adjustments to the 16/17 wheat balance sheet, reducing feed and residual use by 35 million bushels. Seed use was also reduced 8 million bushels as a result of the smaller acreage reported in the Winter Wheat Seedings report. Winter wheat seedings were reported at 32.383 million acres, nearly 2 million acres below the average trade guess and more than 3.7 million below last year. This is the lowest winter wheat seedings since 1909! Hard red winter wheat was the primary driver of the reduced acreage, with seedings down nearly 2 million acres from trade expectations.

Corn production was reduced by 78 million bushels on a 0.7 bushel lower yield and small adjustment in harvested acres. On the demand side, ethanol use was increased by 25 million bushels but that was offset by a 50 million bushel adjustment lower on Feed and Residual use. Ending stocks were down 48 million bushels to 2.355 billion, 23 million below the average trade guess.

 

Here's what the USDA had to say:

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.

U.S. peanut production is reduced 9 percent from the previous forecast based on lower harvested area, mainly in Texas, and lower yields in most states. With reduced supplies, peanut exports, crush, and ending stocks are reduced.

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.

 

2016-17 USDA U.S. Yield (bu/acre)
 
USDA Jan
2016-17
Average Trade Est.
Range of
Trade Est.
USDA Dec
2016-17
Corn
174.6
175.2
173.4-176.1
175.3
Soybeans
52.1
52.7
52.0-53.1
52.5
Wheat
52.6
 
 
52.6

2016-17 USDA U.S. Grain Carryout (bln bu)
 
USDA Jan
2016-17
Average Trade Est.
Range of
Trade Est.
USDA Dec
2016-17
Corn
2.355
2.378
2.206-2.500
2.403
Soybeans
0.420
0.473
0.407-0.515
0.480
Wheat
1.186
1.141
1.100-1.180
1.143

2016-17 USDA U.S. Harvested Acres (million acres)
 
USDA Jan
2016-17
Average Trade Est.
Range of
Trade Est.
USDA Dec
2016-17
Corn
86.7
86.747
85.514-88.231
86.8
Soybeans
82.7
83.013
82.500-83.400
83.0
Wheat
43.9
 
 
43.9

U.S. Quarterly Grain Stocks (bln bu)
 
USDA
Jan 2017
Average Trade Est.
Range of
Trade Est.
USDA
Jan 2016
Corn
12.384
12.323
11.600-12.700
11.238
Soybeans
2.895
2.953
2.745-3.120
2.715
Wheat
2.073
2.056
1.828-2.158
1.746

2017-18 U.S. Winter Wheat Seedings (mln acres)
 
USDA
Jan 2017
Average Trade Est.
Range of
Trade Est.
USDA
2016-17
All Winter
32.383
34.361
31.700-36.381
36.137
HRW
23.300
25.265
22.600-26.664
26.586
SRW
5.680
5.645
4.800-6.600
6.020
White
3.370
3.476
3.250-4.300
3.531

2016-17 USDA World Grain Carryout (million tons)
 
USDA Jan
2016-17
Average Trade Est.
Range of
Trade Est.
USDA Dec
2016-17
Corn
220.98
222.3
218.0-226.0
222.25
Soybeans
82.32
82.7
79.6-84.2
82.85
Wheat
253.29
251.5
250.0-253.5
252.14

 

2016-17 USDA South American Production (million tons)
 
USDA
Jan 2017
Average Trade Est.
Range of
Trade Est.
USDA
2016-17
ARG Corn
36.5
36.1
34.0-37.0
36.5
ARG Soy
57.0
56.1
54.0-57.5
57.0
BRZ Corn
86.5
87.1
86.0-91.1
86.5
BRZ Soy
104.0
102.4
101.5-104.0
102.0
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These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Past performance and testimonials are not necessarily indicative of future results. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.