Corn Stocks Down on Greater Ethanol Demand, Soybeans Reach Decade High

December 12, 2017 10:46 AM
USDA Grain Unloader

Here's the latest from the USDA's World Agricultural Supply and Demand Estimates:


This month’s 2017/18 U.S. corn outlook is for increased corn used to produce ethanol and reduced ending stocks. Corn used to produce ethanol is raised 50 million bushels to 5.525 billion, based on increased sorghum export commitments, and the most recent data from the Grain Crushings and Co-Products Production report, which estimated a lower-than-expected amount of sorghum used to produce ethanol during October. With no other use changes, ending stocks are down 50 million bushels from last month. The projected season-average farm price is unchanged this month at a midpoint of $3.20 per bushel but the range is narrowed 5 cents on each end to $2.85 to $3.55 per bushel.


Total U.S. oilseed production for 2017/18 is projected at 132.2 million tons, up slightly due to a small increase in cottonseed. Soybean exports are reduced 25 million bushels to 2,225 million on stronger-than-expected competition from Argentina and Brazil during the first quarter of the marketing year. Seed use is raised in line with projected plantings in the recently released tables to be included in the upcoming Long Term Agricultural Projections to 2027 report Soybean ending stocks for 2017/18 are projected at 445 million bushels, up 20 million from last month and still the highest since 2006/07. 

Following the December 5, 2017 affirmative determination by the U.S. International Trade Commission regarding countervailing duties on biodiesel imports from Argentina and Indonesia, soybean oil used for domestic production of methyl ester is raised 500 million pounds to 7.5 billion. Reduced soybean oil exports and non-ester domestic use are offsetting, leaving projected ending stocks unchanged at 1.62 billion pounds. 

The U.S. season-average soybean price range for 2017/18 is narrowed to $8.60 to $10.00 per bushel. The soybean meal and soybean oil price ranges are unchanged at $295 to $335 per short ton and 32.5 to 36.5 cents per pound, respectively. 

The global oilseed supply and demand forecasts for 2017/18 include higher production, exports, and ending stocks compared to last month. Global production is forecast at 579.5 million tons, up 0.7 million mostly reflecting higher rapeseed, peanut, and palm kernel production. Rapeseed is increased 0.8 million tons to 72.9 million as reductions for Australia and India are more than offset by a 1.6-million-ton increase for Canada based on recent government estimates. Peanut production is raised for Senegal on higher area and yields. An increase in EU sunflowerseed production is offset by lower production for Russia and Argentina. Other production changes include higher palm oil for Indonesia and Thailand and lower palm oil for Malaysia. 

Global oilseed exports for 2017/18 are raised 0.5 million tons to 176.3 million with higher soybean exports for Argentina and Brazil and higher rapeseed exports for Canada. Partly offsetting are lower soybean exports for the United States and Canada, and lower sunflowerseed exports for Argentina. Global soybean stocks are up 0.4 million tons to 98.3 million, with lower stocks in South America offset by higher stocks in the United States, Canada, and the EU.


Projected 2017/18 U.S. ending stocks are raised this month by 25 million bushels on reduced exports. This reduction is primarily attributed to heightened Canadian competition expected from its increased exportable supplies. Canada and the United States compete in several of the same markets in Latin America and East Asia. No other supply or use categories are revised this month. Based on NASS prices reported to date and price expectations for the rest of the marketing year, the projected 2017/18 season-average farm price (SAFP) is unchanged at the midpoint of $4.60 per bushel. However, the SAFP is narrowed by 10 cents at both ends of the range to $4.50 to $4.70.

Global 2017/18 wheat supplies are increased, primarily on higher production forecasts for Canada and the European Union more than offsetting production declines in Brazil, South Africa, and Yemen. Canadian wheat production is raised 3.0 million tons to 30.0 million, largely on increased yields in the Prairie Provinces as reported in Statistics Canada’s Production of Principal Field Crops report, released on December 6. EU wheat production is raised 1.0 million tons to 152.5 million, mainly on higher production in Romania, Poland, Latvia, and Bulgaria.

World 2017/18 trade is greater this month as higher exports from Canada, Russia, and Ukraine more than offset reduced U.S. exports. Projected imports are increased for Indonesia, China and Brazil. Indonesia’s imports are raised 1.0 million tons to 11.5 million, primarily on higher expected feed wheat usage. Total world consumption is projected 2.1 million tons higher, primarily on greater usage from Indonesia, Canada, and the EU. Projected global ending stocks are 0.9 million tons higher this month at 268.4 million, which is a new record.

Livestock and Poultry

The 2017 forecast of total red meat and poultry production is reduced from last month on lower beef and pork production forecasts. Beef production is lowered on the current pace of cattle slaughter and lighter carcass weights. The pork production forecast is lowered on smaller-than-anticipated hog slaughter this quarter although partly offset by higher carcass weights. The broiler forecast is raised on a revision to third-quarter production data. The turkey production forecast is unchanged from the previous month. The egg production forecast is lowered on recent hatchery data. For 2018, the total red meat and poultry forecast is lowered from last month on lower expected beef and pork production. Beef production is forecast lower, reflecting slightly lighter carcass weights in 2018. Pork production is reduced as fractionally heavier first-quarter carcass weights only partially offset smaller-than-expected hog slaughter. USDA will release its Quarterly Hogs and Pigs report on December 22 which will provide an indication of producers’ farrowing intentions into the first half of 2018. Broiler and turkey production forecasts are unchanged from the previous month. The egg production forecast is raised for 2018. 

The beef and turkey export forecasts are raised for 2017 on strong global demand which is expected to carry into first-quarter 2018. No change is made to pork and broiler trade forecasts. The egg export forecast is raised for 2017, supported by expectations of solid demand and recent trade data while the egg import forecast is reduced. No change is made to the 2018 egg trade forecasts. 

The cattle price forecast for 2017 is lowered on recent prices, but the 2018 cattle price forecast is unchanged from the previous month. The hog price forecast for 2017 is raised on recent demand strength and as this strength is expected to carry into 2018, hog price forecasts are raised for next year. The broiler price forecast is lowered for 2017, but the forecast is unchanged for 2018. Turkey price forecasts are lowered for 2017 and 2018 on relatively weak demand. Egg prices are raised for 2017 and 2018 on strength in demand. 

Milk and Cheese

The milk production forecast is lowered for 2017 on slower growth in milk per cow. The slower growth in milk per cow is expected to carry into 2018 and combined with an expected slower rate of growth in cow numbers, the 2018 milk production forecast is lowered. The 2017 and 2018 fat basis import and export forecasts are unchanged from the previous month. On a skim-solids basis, the 2017 and 2018 export forecasts are raised on higher expected whey exports. No changes are made to 2017 and 2018 skim-solids basis import forecasts. 

Price forecasts for cheese, butter, and nonfat dry milk are lowered for 2017 on current price weakness and slower demand. The 2017 whey price forecast is unchanged at the midpoint. All dairy product price forecasts are reduced for 2018 on pressure from large stocks and slower expected demand. Class III and Class IV price forecasts are lowered for 2017 and 2018, reflecting the lower product prices. All milk prices are forecast lower at $17.60 to $17.70 per cwt for 2017and $16.65 to $17.45 per cwt for 2018. 


For sorghum, recent large purchases by China have increased sorghum prices relative to corn, sharply reducing the estimated amount of sorghum used to produce ethanol. With expectations of increased U.S. sorghum exports to China, projected food, seed, and industrial use for sorghum is reduced by 50 million bushels, with an offsetting 50 million bushel increase in exports.

Global coarse grain production for 2017/18 is forecast 1.4 million tons higher to 1,323.9 million. The 2017/18 foreign coarse grain outlook is for larger production, increased consumption, and higher stocks relative to last month. Foreign corn production is forecast higher with increases for China, the EU, Laos, and Guatemala more than offsetting a reduction for Russia. China’s corn production is raised based on the latest data from the National Bureau of Statistics. EU corn production is higher, mostly reflecting an increase for Romania that more than offsets declines for several countries. Corn exports are lowered for Russia but raised for the EU. Foreign corn ending stocks are raised from last month, largely reflecting increases for China, the EU, and Brazil that more than offset declines for Egypt and Mexico. Global corn stocks, at 204.1 million tons, are up slightly from last month.


Total 2017/18 U.S. rice supplies are unchanged at 248.9 million cwt. Exports are lowered 1.0 million cwt (all medium- and short-grain) on increased competition from other suppliers in the Mediterranean region. A 2.0-million-cwt reduction in rough rice exports is partially offset by a 1.0-million-cwt increase in milled. Export demand has been better than expected in important milled rice markets such as Iraq and Haiti but less favorable in rough rice markets, most notably Venezuela. The all rice marketing year average price is lowered $0.20 per cwt at the midpoint to a range of $12.30 to $13.30. All classes of rice are reduced this month.

Global rice production for 2017/18 is raised 2.3 million tons to 483.5 million led by a 2.0- million-ton increase for China and a 0.4-million-ton increase for Burma. The China increase is based on updated production data from China’s National Bureau of Statistics. Burma’s increase is on slightly higher harvested area and better-than-expected yields. Global exports and total use are each raised 0.4 million tons. With total supplies rising faster than use, world ending stocks are raised 1.8 million tons to 140.7 million. China ending stocks are raised 2.0 million tons to 94.5 million; the largest since 1999/2000.


U.S. beet sugar production for 2017/18 is projected at 5.359 million short tons, raw value (STRV), up 409,256 from last month. Recovery of sucrose from sliced sugarbeets for the first three months of the August/July crop year from Sweetener Market Data report provides the first empirically based estimate of full crop year recovery. That recovery is projected at 15.4 percent in line with recent historical records. Crop year beet sugar production that includes sugar from desugared molasses is projected at 5.530 million STRV. The fiscal year October/September projection includes adjustments for August-September production that subtracts the estimate for 2017 and adds the historically based projection for 2018. This also includes sugar produced from imported sugarbeets from Canada. Sugar imports for 2017/18 are reduced by 384,452 STRV, as less sugar projected from Mexico is only partially offset by an increase in 2016/17 raw sugar tariff-rate quota imports entering after September 30. Ending stocks for 2017/18 are projected at 1.802 million STRV, implying a stocks-to-use ratio of 14.3 percent.

The projection of Mexico sugar exports to the United States is based on the larger of the Target Quantity of U.S. Sugar Needs from this WASDE report or the effective 2017/18 Export Limit previously calculated by the U.S. Department of Commerce (USDOC). Mexico sugar exports to the United States are reduced by 364,595 metric tons (MT) to 1.085 million which is the Export Limit set by USDOC in September 2017 because it exceeds the Target Quantity of U.S. Needs from this WASDE. Deliveries for 2017/18 IMMEX are increased by 60,000 MT. The ending stock total for 2017/18 is projected at 1.008 million MT, an amount to meet sugar supply requirements of domestic consumption before the next season harvest. Exports to non-U.S. destinations for 2017/18 are residually projected at 131,298 MT. Total exports for 2017/18 are projected at 1.217 million MT. 


This month’s 2017/18 U.S. cotton forecasts include higher exports, slightly higher production, and lower ending stocks. Production is raised 63,000 bales as increases in the Southwest are largely offset by decreases in other regions. Domestic mill use is unchanged, but exports are raised 300,000 bales due to reduced production in other countries. Ending stocks are now projected at 5.8 million bales, 200,000 lower than forecast in November, but more than double their 2016/17 level. The forecast range for the marketing year average price received by producers is raised 3 cents at each end, to a midpoint of 66 cents.

The global 2017/18 cotton forecasts include lower beginning stocks, production, and ending stocks. Global production is reduced 1.5 million bales as reductions for Pakistan, India, Burkina Faso, Argentina, and Australia are only partly offset by increases in Turkey and Central Asia. A 1.0-million-bale decline in India’s estimated beginning stocks results in a similar decline in global 2017/18 beginning stocks. The revision in India’s beginning stocks reflects higher estimated consumption since 2015/16, and both India’s and world 2017/18 consumption is forecast higher this month—a 335,000-bale increase in the global forecast. World consumption is forecast to grow at a 4.2 percent annual rate in 2017/18, more than double its long-run level. Projected world ending stocks are 2.9 million bales lower this month than in November, and at 87.9 million bales are now forecast marginally higher than the year before.

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