USDA reports show 'too much grain'

By Spencer Chase

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Sept. 12, 2016 - USDA reports released today did little to provide price support to American grain producers as signs still point to bin-busting crops.

The reports - the September edition of the World Agricultural Supply and Demand Estimates and the monthly Crop Production forecasts - fell largely in line with analyst expectations yet still sent markets in a predictable downturn.

“Regardless of the numbers, you just have too much grain the U.S. and in the world,” Don Roose with U.S. Commodities said in an interview with Agri-Pulse.

The corn crop looks like a record-setter, albeit not to the extent USDA predicted a month ago. USDA today projected a 15.093 billion bushel crop, down about 1 percent from its August projection but 11 percent higher than last year. The means a yield average of 174.4 bushels per acre, down slightly from August but still 6 bushels higher than 2015. If realized, the production and yield figures would both set records.

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Record-setting ways are also reflected in the soybean market, where a crop of 4.2 billion bushels was projected. That's a 7 percent increase from last year and 3 percent higher than what was anticipated in August. The yield estimate of 50.6 bushels per acre would also be a record if realized.  

Based on the information in today's reports, USDA raised the average corn price a nickel to somewhere in the $2.90 to $3.50 per bushel range. Soybean prices went down by the same amount to a range of $8.30 to $9.80.

Roose said that for any kind of price support to emerge from the markets, producers “have to” reduce acres.

“Corn acres probably get reduced next year because we planted more corn acres versus beans (this year); wheat acres probably come down because it's not profitable and marginal land will probably go out of production,” he said. However, he added that those factors could lead to an increase in soybean acres.

Global estimates largely mirror U.S. projections with lowered corn expectations but higher anticipated production in oilseeds.

The export forecast for corn was left unchanged from the August report, “reflecting the competitiveness of U.S. corn on the world market,” the WASDE report said. Corn ending stocks were lowered from a month ago, but would still be a record high at 219.5 million.

Soybean exports, on the other hand, were increased 60 million bushels to a record 1.9 billion bushels, based on trade indications and a “record high August export inspections.” The increased exports were the main reason ending stocks were lowered to 195 million bushels, a 60 million decrease from last month.  

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Roose noted that any kind of drastic shift in markets would require a substantial weather event. He said corn looks to be in a “big, broad trading range” and that soybeans “still need to find a floor.” Both corn and soybeans traded lower after the release of the reports.

Some other notes from today's reports:

--Although the cotton harvest will not be one for the record books, it still looks to take a sizable jump over last year's production. USDA estimates production for all cotton types to be up 25 percent from last year to 16.1 million 480-pound bales. Upland cotton is projected at 25 percent higher and pima cotton production is expected to increase 30 percent.

--The WASDE report also offered insight into the global wheat market, where supplies were raised 400,000 metric tons; the U.S. marketing year average price was lowered a dime per bushel to $3.30 to $3.90.

--Sorghum production is forecast 14 million bushels higher than August numbers based on higher yields. Average prices are projected at $2.75 to $3.35 per bushel, a 5-cent increase from last month.

--Total rice production was lowered 7.2 million hundredweight due to lower yield and impact on harvested area due to flooding in Southern states. However, global rice supplies were raised 1.8 million metric tons, largely on projected increase in  harvested area in India.

--Sugar production and beginning stocks were both increased while imports were reduced.

The next WASDE and Crop Production forecasts will be published on Oct. 12.

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