Ending stocks of corn and soybeans were trimmed slightly, but wheat stockpiles have hit record levels, according to USDA’s June World Agricultural Supply and Demand Estimates released Friday.
Analysts said that although USDA cut ending stocks for corn and soybeans in a world dealing with an oversupply of grain, June’s report was not a market mover.
“Corn and wheat are not in danger of running out and will work against bean rallies,” observed Water Street Solutions in a post-report commentary.
“It was not a huge shocker,” said DuWayne Bosse of Bolt Marketing in Britton, S.D. Although the market traded up for 10 minutes to 15 minutes after the report was issued, computers generated the uptick, he observed.
“The interesting thing was that new crop soybeans were down to 260 million bu, which leaves little room for weather issues for the 16/17 growing season,” Bosse said. If weather woes reduce yield, soybeans could shoot even higher than Friday’s midday prices of $11.50. “The question is, if we get rain in the forecast, will the funds continue to stay long?” Bosse asked.
Rich Nelson, chief strategist for Allendale, observed that USDA reported “serious declines” in South American crops. June’s report reduced Brazil’s corn production for 2015/16 by 3.5 million metric tons to 77.5 million metric tons, lower than the trade estimate of 79 million metric tons.
USDA lowered its forecast for 2016-17 U.S. corn ending stocks to 2.008 billion bu., which is just slightly less than the trade’s estimate of 2.125 billion bu. USDA increased its forecast for corn exports by 100 million bushels, noting that U.S. corn export commitments are above year-ago levels, thanks to weather woes in South America that are affecting production.
USDA raised the season-average farm price for corn for both 2015/16 by 10 cents, with a range of $3.60 to $3.80 per bushel, and 2016/17 by 15 cents with a range of $3.20 to $3.80 per bushel.
Looking globally, USDA lowered the forecast for 2016-17 world ending stocks of corn by 1.9 million metric tons to 205.1 million metric tons.
USDA forecast U.S. soybean ending stocks for 2016-17 at 260 million bu., which is less than the trade estimate of 289 million bu. Old-crop ending stocks are projected at 370 million bu, which also is less than the trade estimate of 385 million bushels. USDA raised its crush estimate for 2015-16 by 10 million bushels, to 1.890 billion, reflecting strong soymeal exports. Crop shortfalls in South America are translating into more demand for U.S. soybeans.
USDA projected the 2016/17 season-average price for soybeans at $8.75 to $10.25 per bushel, up 40 cents at the midpoint. Soybean meal prices were forecast at $320 to $360 per short ton, unchanged at $8.05 to $9.55 per bushel.
USDA also lowered soybean global ending stocks for 2016/17 by 1.9 million metric tons to 66.3 million metric tons.
With ending stocks of 1.05 billion bu., wheat supplies are at a 29-year high, according to USDA estimates. Favorable growing conditions in the Great Plains are also expected to result in a big wheat crop this year, despite reduced acreage.