USDA lowered its new-crop ending stocks estimate for corn by more than expected but increased ending stocks of new-crop soybeans more than the trade anticipated, according to World Agricultural Supply and Demand Estimates (WASDE) released today.
“It’s only May. There will be some give and take going forward as these numbers are adjusted,” said Doug Werling, vice president of trading for Bower Trading in Lafayette, Ind. Werling was the commentator on an MGEX post-report press conference.
Today’s report was the first look at the 2015-16 corn and soybean crops.
Corn Demand to Climb to New Record
U.S. corn use for the 2015-16 crop is projected to hit a record 13.8 billion bushels, 1% higher than this month’s projection for old-crop feed use.
Corn used in ethanol production for the coming crop year, however, was unchanged from the 2014-15 crop year. However, USDA expects new-crop corn exports to be 75 million bushels larger than old-crop exports, which were also increased by 25 million bushels in the May WASDE report.
“More competitive prices and growth in world demand support gains in U.S. exports,” said USDA in today’s report.
China is expected to be a bigger buyer of corn in the global marketplace this year, noted Bower. China wants its producers to grow more corn, and is scaling back on soybean production as it relies more heavily on soybean imports.
Corn ending stocks for 2015-16 are projected to drop to 1.7 billion bushels, down 105 million bushels from the 2014-15 ending stock projection and 52 million bushels lower than the average trade estimate of 1.752 billion bushels.
“The report is a little friendly for corn,” said Bower. He cautions, however, that today’s look at the 2015-16 crop is still very preliminary.
USDA pegs the season-average new-crop corn farm price at $3.20 to $3.80 per bushel, which is 15 cents lower than the midpoint of this month’s lowered average 2014-15 price of $3.65.
New-Crop Soybean Ending Stocks Could Surge
USDA estimates U.S. new-crop ending stocks of soybeans at 500 million bushels, up 150 million from old-crop ending stocks, and much larger than the average trade guess of 443 million bushels.
“That number will likely be adjusted going forward,” said Bower. “Over the past 10 years when we’ve had good planting conditions, it has favored corn.”
The new-crop soybean ending stocks estimate will be a number to watch, added Bower.
Demand for soybeans will also increase. New-crop soybean crush is projected at 1.825 billion bushels, which is 20 million bushels above the current-year’s crush. U.S. soybean meal use is projected to increase 3.2% in line with expected gains in U.S. meat production, according to USDA.
The department expects the U.S. season-average new-crop soybean price to drop to $8.25 to $9.75 per bushel compared with a midpoint of $10.05 for old-crop soybeans. Soybean meal prices are forecast at $305 to $345 per ton, compared with an average of $365 per ton for the 2014-15 drop year.
“Despite lower prices, soybean meal exports are projected to decline with increased exports from South America and India accounting for most of the gains in global soybean meal trade,” noted USDA.
New-crop U.S. soybean exports are projected to decline to 1.775 billion bushels, down 25 million bushels from this year year’s levels.
Read complete coverage of the May 12 USDA reports.