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09

December USDA Supply & Demand

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The USDA made minor adjustments in this report as trade looks to the January report for more substantial supply/demand changes. The USDA did lower corn demand 25 million bushels by decreasing exports 50 million bushels and increased corn for ethanol by 25 million bushels. Soybeans and wheat were unchanged from November.

 

Here's what the USDA had to say:

COARSE GRAINS: Projected U.S. feed grain ending stocks for 2015/16 are raised slightly this month. U.S. corn use for ethanol production in 2015/16 is projected 25 million bushels higher based on the stronger-than-expected pace of ethanol production during November as indicated by weekly data from the Energy Information Administration (EIA). EIA also raised its forecasts for 2015 and 2016 gasoline consumption in the December Short-term Energy Outlook. Corn exports for 2015/16 are projected 50 million bushels lower, reflecting the slow pace of sales and shipments to date and higher projected exports for Brazil and Canada. U.S. corn ending stocks are projected 25 million bushels higher at 1,785 million bushels. The projected range for the season-average corn farm price is unchanged at $3.35 to $3.95 per bushel, in line with prices reported to date and current futures price levels. The sorghum farm price range is lowered 10 cents on each end to $3.20 to $3.80 per bushel, reflecting the latest reported prices through October and continued weakness in interior cash sorghum bids.


Global coarse grain supplies for 2015/16 are projected lower this month with global corn production lowered 1.0 million tons. Corn production is lowered 1.5 million tons for India with reduced area and yield prospects as a result of limited monsoon rainfall. South Africa corn production is lowered 0.8 million tons as October and November dryness has significantly delayed plantings in the higher-yielding eastern growing areas, thus reducing yield prospects. Partly offsetting these reductions is a 1.3-million-ton increase for Canada corn based on the latest official production estimates from Statistics Canada. Other coarse grain production changes for 2015/16 are mostly offsetting with lower Argentina sorghum, Chile oats, and Australia barley output offset by higher Canada barley and India millet production.


Global coarse grain consumption for 2015/16 is lowered slightly. Global corn consumption is lowered 1.0 million tons mostly reflecting lower use in India and Taiwan. Corn use is increased for EU and Chile. Global barley consumption is raised with increases for EU and Canada. Millet consumption is higher for India with a larger crop, but oats consumption declines for Chile with a smaller crop. World corn trade for 2015/16 is lowered with imports reduced for Canada and Taiwan. Corn exports are lowered for the United States, India, and South Africa, but raised for Canada. Brazil corn exports for 2014/15 (March 2015 through February 2016) are raised 1.0 million tons to a record 32.0 million putting additional pressure on 2015/16 U.S. corn exports (September 2015 through August 2016). Global corn ending stocks for 2015/16 are nearly unchanged with higher projected stocks for the United States and Canada offset by lower projected stocks for Brazil and EU.


WHEAT: No changes are made to the U.S. all wheat balance sheet this month. By-class, the only changes are a 10-million-bushel increase in 2015/16 Hard Red Winter exports that is offset by a 10-million-reduction in Hard Red Spring exports.


Global wheat supplies for 2015/16 are raised 2.3 million tons primarily on increased production but also higher beginning stocks. World wheat production remains record high and is raised 1.9 million tons to 734.9 million. The primary production change is for Canada, which is raised 1.6 million tons to 27.6 million on a Statistics Canada report.


Global wheat trade for 2015/16 is raised with exports up 1.3 million tons on larger supplies, expected policy changes in Argentina, and stronger demand in several importing countries. Exports are raised 1.0 million tons for Argentina, and 0.5 million tons each for Canada and Ukraine. The Argentina change is based on the expectation that the new government will reduce export restrictions. The Canada change is on a larger crop as well as a strong pace to date. The Ukraine change is also on a fast pace as well as strong feed wheat demand in Southeast Asia. Partially offsetting is a 1.0-million-ton reduction for EU exports on a slow pace of licenses and competition, especially from Black Sea origins. The largest import increases are 0.4 million tons for Ethiopia on expectations of additional tenders in response to emergency food needs, and 0.3 million tons each for Indonesia and Thailand on increased feed wheat purchases.


Total world wheat consumption for 2015/16 is down 0.2 million tons. The biggest change is a 1.0-million-ton decrease in EU wheat feeding that is mostly offset by increased consumption in several other countries, notably 0.3 million-ton-increases each for Indonesia and Thailand feeding. Global ending stocks are projected 2.6 million tons higher with large increases for the EU and Canada partially offset by decreases for Argentina and Ukraine.


OILSEEDS: Total U.S. oilseed production for 2015/16 is forecast at 117.7 million tons, down slightly due to a small reduction in cottonseed. Soybean supply and use projections for 2015/16 are unchanged from last month. Soybean ending stocks are unchanged at 465 million bushels which, if realized, would be the highest since 2006/07. Soybean oil used for methyl ester is raised 200 million pounds for 2015/16 reflecting the recent Environmental Protection Agency announcement of the biodiesel mandate for 2016.


The U.S. season-average soybean price for 2015/16 is forecast at $8.15 to $9.65 per bushel, unchanged from last month. Soybean meal is forecast at $290 to $330 per short ton, down 10 dollars on both ends of the range. Soybean oil is forecast at 28.5 to 31.5 cents per pound, up 1 cent on both ends.


Global oilseed production for 2015/16 is projected at 529.0million tons, down 2.0 million tons with foreign oilseeds accounting for most of the change. Global soybean production is projected at 320.1 million tons, down 0.9 million. The India soybean crop is reduced 1.5 million tons to 8.0 million on lower yields resulting from inconsistent rainfall during the growing season and late-season heat. Larger projections for Canada, Russia, and Ukraine partly offset the reduction for India. Global rapeseed production is projected at 67.5 million tons, up 0.5 million with a larger crop in Canada only partly offset by a lower forecast for India. Canada rapeseed production is raised 1.7 million tons to 17.2 million based on the latest survey results from Statistics Canada. The India crop is reduced on lower projected area, reflecting planting progress to date. Palm oil production is reduced for Indonesia and Malaysia for 2015/16 reflecting unusually dry conditions from June through October 2015. The Indonesia crop is reduced 2.0 million tons to 33.0 million and the Malaysia crop is reduced 0.5 million tons to 20.5 million. Other changes include reduced cottonseed production for China and Pakistan.


Global oilseed trade for 2015/16 is projected at 147.7 million tons, up 0.7 million from last month. Soybean exports account for most of the change with higher projections for Argentina, Serbia, and Ukraine. Soybean imports are raised for Pakistan, Taiwan, and Iran. Rapeseed exports are also higher with an increase for Canada only partly offset by a lower projection for Australia. Global oilseed crush is projected lower primarily on reduced rapeseed and soybean crush for India. For Pakistan, increased soybean crush partly offsets lower rapeseed and cottonseed crush. Global oilseed ending stocks are projected at 95.1 million tons, up 1.0 million mainly reflecting increased rapeseed stocks in Canada. Global vegetable oil stocks are projected at 16.1 million tons, down 2.3 million mainly on lower palm oil stocks in Indonesia, Malaysia, and India.

 

2015-16 USDA U.S. Grain Carryout (bln bu)
 
USDA Dec
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Nov
2015-16
Corn
1.785
1.768
1.640-1.810
1.760
Soybeans
0.465
0.462
0.445-0.478
0.465
Wheat
0.911
0.918
0.910-0.936
0.911

 

2015-16 USDA World Grain Carryout (million tons)
 
USDA Dec
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Nov
2015-16
Corn
211.85
212.10
209.0-214.0
211.91
Soybeans
82.58
82.60
81.0-84.0
82.86
Wheat
229.86
226.40
224.0-228.7
227.30

Source: USDA, Reuters, Bloomberg

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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.