May USDA Supply & Demand

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CORN:  The USDA’s outlook for 2017/18 calls for lower production, domestic use, exports and ending stocks. The corn crop is projected at 14.1 billion bushels, down from last year’s record high with a lower forecast area and yield. The yield projection of 170.7 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer weather. The smaller corn crop is partly offset by the largest projected beginning stocks since 1988/89, leaving total corn supplies down from a year ago but still the second highest on record.

Total U.S. corn use in 2017/18 is forecast to decline 2 percent from a year ago as a slight increase in domestic use is more than offset by lower exports.  Food, seed, and industrial (FSI) use is projected to rise 80 million bushels to 7.0 billion due to increased use of corn to produce ethanol for fuel and expected growth in non-ethanol FSI.

Corn used to produce ethanol is up 50 million bushels, reflecting expectations of gasoline consumption growth, reduced sorghum used to produce ethanol, higher expected blending and continued global ethanol import demand.

Projected feed and residual use declines as a smaller crop and increased use of ethanol by-products more than offsets growth in grain consuming animal units.

U.S. corn exports are down 350 million bushels, as a 1.0-billion-bushel year-over-year increase in the combined corn exports of Brazil and Argentina during 2016/17 is expected to cut into the 2017/18 U.S. shipping season.  With total supply falling faster than use, 2017/18 U.S. ending stocks of corn are down 185 million bushels. The season-average farm price is projected at $3.00 to $3.80 per bushel, unchanged at the midpoint from 2016/17.

The global coarse grain outlook for 2017/18 is for lower production, increased use and sharply reduced ending stocks.  Corn production is forecast down from a year ago, with the largest declines in China and the United States.  Partly offsetting are larger crops projected for the EU and Canada. Global corn use is up 9 million tons (1 percent), while global corn imports are projected to increase 7 million tons.  Global corn ending stocks are down from last year’s record high and if realized would be the lowest since 2013/14.  The drop largely reflects forecast declines for China and the United States.

For China, total corn supply is down 14 million tons in 2017/18, based on projected declines in beginning stocks and production.  Area is reduced based on planting intentions published by the National Bureau of Statistics.  On the demand side, feed and residual use is expected to increase based on continued relatively low internal market prices, efforts by the government to promote use of domestic supplies and reduced imports of corn substitutes.


OILSEEDS:  The 2017/18 outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks.  The soybean crop is projected at 4,255 million bushels, down 52 million from last year’s record crop with a forecast lower trend yield more than offsetting higher harvested area.  With sharply higher beginning stocks, soybean supplies are projected at 4,715 million bushels, up 4 percent from 2016/17.

The U.S. soybean crush for 2017/18 is projected at 1,950 million bushels, up 25 million from the revised 2016/17 forecast.  Domestic soybean meal disappearance is forecast to increase with expected gains in U.S. meat production.  U.S. soybean meal exports are forecast at 12.4 million short tons, leaving the U.S share of global trade slightly lower than in 2016/17.  With increased supplies and lower projected prices, U.S. soybean exports are forecast at 2,150 million bushels, up 100 million from the revised 2016/17 projection.

Despite sharply higher beginning stocks in South America this fall, a smaller projected harvest in early 2018 leaves 2017/18 total supplies almost unchanged from 2016/17, limiting projected gains for South American soybean exports.  With forecast global soybean import growth of 5 percent, the U.S. soybean export share is projected at 39 percent, up slightly from 2016/17 and near the 5-year average.

U.S. ending stocks for 2017/18 are projected at 480 million bushels, up 45 million from the revised 2016/17 forecast.  The 2017/18 U.S. season-average soybean price range is forecast at $8.30 to $10.30 per bushel compared with $9.55 per bushel in 2016/17.  Soybean meal prices are forecast at $295 to $335 per short ton, compared with $320 per ton for 2016/17.  Soybean oil prices are forecast at 30.0 to 34.0 cents per pound compared with 31.75 cents for 2016/17.

The 2017/18 global oilseed supply and demand forecasts include higher production, crush, and exports compared to last year.  Soybean production is projected down 3.4 million tons to 344.7 million mainly on declines from last year’s records for the United States, Brazil, and Paraguay as yields return to trend levels.  Conversely, soybean production is forecast up for Canada, China, Bolivia, and Ukraine.

Global oilseed crush is forecast to increase 17 million tons to 486.0 million in 2017/18 driven by higher demand for protein meals and oils.  Global protein meal consumption is projected to expand 4 percent in 2017/18.  China’s soybean meal equivalent consumption is expected to grow at 5 percent, similar to last year but below the prior 5-year average.  Global vegetable oil consumption is projected at 189.0 million tons, up 5.4 million led by increases for India and China.  Soy oil production gains are expected for China and palm oil production gains for Indonesia and Malaysia.

Global soybean exports are projected at 149.6 million tons, up 5.0 million from 2016/17.  Imports are expected to grow for China, Egypt, Vietnam, and the EU.  Lower global production has led to a 1.3-million-ton decrease in soybean stocks, particularly in Brazil and Argentina where stocks are expected to decline by 2.6 million tons combined.  Partially offsetting are higher stocks in the United States and Canada.


WHEAT:  U.S. wheat supplies for 2017/18 are projected down 9 percent from 2016/17 on lower production, which is partially offset by higher beginning stocks.  All wheat production for 2017/18 is projected at 1,820 million bushels, down nearly 500 million bushels from the prior year.  The year-to-year decline is due to a sharp reduction in planted area and projected lower yields.  The all wheat yield is projected at 47.2 bushels per acre, down 10 percent from last year’s record.

The first survey-based forecast for 2017/18 winter wheat production is down sharply with the lowest harvested area in more than a century and lower yields.  Winter wheat benefited from diminishing drought conditions in the Plains and Midwest.  However, a late April snow storm affected large portions of the Hard Red Winter wheat belt, especially western Kansas.  Combined spring wheat and Durum production for 2017/18 is projected to decline 10 percent on lower area and a return to trend yields.

Total use for 2017/18 is projected down 2 percent on lower exports and feed and residual use.  Exports are projected at 1.0 billion bushels, down 35 million from the previous year’s revised level but above the five-year average.  The EU is expected to regain export market share following last year’s small crop and quality problems.  U.S. feed and residual use is projected down 20 million bushels on lower supplies.  U.S. ending stocks are projected to decline 245 million bushels to 914 million, the lowest in three years.  The season-average farm price is projected at $3.85 to $4.65 per bushel.  The mid-point of this range is up $0.35 from the previous year’s low level.

Global wheat supplies are projected to decline fractionally as higher beginning stocks are more than offset by a production decline following last year’s record.  Total wheat production is projected at 737.8 million tons, the second highest total on record.  Global wheat consumption is projected down slightly from last year’s record with reduced feed and residual usage partially offset by increased food use.  Global imports are expected to be a record for the fifth consecutive year.  Global ending stocks are projected at a record 258.3 million tons, up 2.9 million from 2016/17.

Source: USDA

2016-17 USDA U.S. Grain Carryout (bln bu)
  USDA May 2016-17 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
Corn 2.295 2.326 -0.031 2.269-2.500 Slightly Bullish
Soybeans 0.435 0.438 -0.003 0.417-0.466 Neutral
Wheat 1.159 1.162 -0.003 1.145-1.200 Neutral
2017-18 USDA U.S. Grain Carryout (bln bu)
  USDA May 2017-18 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
Corn 2.110 2.120 -0.010 1.835-2.400 Neutral
Soybeans 0.480 0.555 -0.075 0.420-0.759 Bullish
Wheat 0.914 0.933 -0.019 0.842-1.100 Slightly Bullish
2016-17 USDA World Grain Carryout (million tons)
  USDA May 2016-17 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
Corn 223.90 223.3 +0.60 221.5-228.8 Neutral
Soybeans 90.14 87.5 +2.64 86.1-89.0 Slightly Bearish
Wheat 255.35 252.2 +3.15 250.7-253.2 Slightly Bearish
2017-18 USDA World Grain Carryout (million tons)
  USDA May 2017-18 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
Corn 195.27 209.7 -14.43 190.7-225.0 Bullish
Soybeans 88.81 86.6 +2.21 80.5-94.0 Slightly Bearish
Wheat 258.29 246.1 +12.19 238.0-257.0 Bearish
2017 U.S. Wheat Production (bln bu)
  USDA 2017 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
All Wheat 1.820 1.859 -0.039 1.776-1.984 Slightly Bullish
Winter 1.246 1.293 -0.047 1.200-1.474 Slightly Bullish
HRWW 0.737 0.769 -0.032 0.686-0.915 Slightly Bullish
SRWW 0.297 0.305 -0.008 0.260-0.335 Neutral
White 0.212 0.217 -0.005 0.180-0.263 Neutral
2016-17 South American Production (million tons)
  USDA May 2016-17 Average Trade Est. Actual v. Trade Est Range of Trade Est. Market Implication
ARG Corn 40.00 38.5 +1.50 37.0-39.0 Slightly Bearish
ARG Soy 57.00 56.2 +0.80 55.0-58.5 Neutral
BRZ Corn 96.00 94.2 +1.80 93.0-96.2 Slightly Bearish
BRZ Soy 111.60 111.3 +0.30 110.5-113.0 Neutral


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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.