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12

January USDA Supply & Demand and Quarterly Grain Stocks

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Today’s USDA reports reduced corn (0.8 bu per acre) and bean yields (0.3 bu per acre) surprising traders and pushing bean prices up over their green line 20-day moving average. Meal and all wheat contracts also surged through their resistance lines putting spec traders on notice that most short term crop market trends are turning up from down. Corn bumped up against its green line but did not clear that before sagging.

With spec funds holding very large net short positions in crop markets a change in trend could mean a decent rally is ahead as specs bail out of shorts.

The smaller corn yield translated into a 13.601 billion bushel crop down 47 million from the USDA’s last estimate. The bean crop was finalized at 3.930 billion bushels down 50 million from the last USDA estimate. Wheat supply numbers were left unchanged.

The U.S. corn carryover was increased by 17 million bushels after allowing for smaller usage. The bean carryover was cut by 31 million bushels and wheat increased by 23 million.

World ending stocks of corn were cut from 211.85 million tons to 208.94 million tons. World soybean ending stocks were cut 229.86 million tons to 79.28 million tons. World wheat stocks were increased from 229.86 million tons to 232.04 million tons.

Perhaps the most interesting number was U.S. winter wheat planted acreage. All winter wheat acreage was reported at 36.609 million acres. That is down from last year’s 39.461 million acres and the average trade guess of 39.327 million. The low of the trade estimates was 38.250 million. This is our 1st indication that cheap prices can reduce planted acres.

 

Here's what the USDA had to say:

COARSE GRAINS: U.S. feed grain supplies for 2015/16 are lowered as small increases in corn and sorghum imports and sorghum production are more than offset by a reduction in corn production. Harvested area for corn is raised slightly, but the national average yield is estimated 0.9 bushel per acre lower than the previous forecast at 168.4 bushels per acre. Corn production for 2015/16 is estimated 53 million bushels lower, but remains the third largest crop on record at 13.6 billion. Sorghum production is estimated 3 million bushels higher as an increase in harvested area more than offsets a reduction in yield.

Total projected corn use for 2015/16 is reduced slightly with lower projected food, seed, and industrial use and exports. Feed and residual use is unchanged as September-November disappearance, as indicated by the December 1 stocks, was largely in line with expectations. Corn used to produce ethanol is unchanged, but projected use for sweeteners is lowered 10 million bushels. Exports are lowered 50 million bushels based on the slow pace of sales and shipments to date and continued strong competition from South American suppliers. Corn ending stocks are projected 17 million bushels higher at 1.8 billion bushels, stocks remain the highest since 2005/06. The projected range for the 2015/16 season-average corn farm price is lowered 5 cents on each end to $3.30 to $3.90 per bushel reflecting weakness in export demand and recent declines in cash and futures prices. The sorghum farm price is lowered 20 cents at the midpoint to a range of $3.05 to $3.55 per bushel reflecting the weakening relationship to cash corn prices in interior markets.

Global coarse grain supplies for 2015/16 are projected 6.8 million tons lower mostly on lower corn production for South Africa and the United States and lower rye production for Russia. Foreign coarse grain supplies are lowered 5.9 million tons. Corn production is lowered 4.0 million tons for South Africa as continued heat and dryness during December further reduced prospects for area and yields, particularly in the western producing areas where satellite imagery suggests much of this year’s crop may not have been planted. Russia corn production is lowered 0.5 million tons with reductions in area and yields, but an area increase for Ukraine corn raises production an offsetting 0.5 million tons. Other corn production changes include small reductions for China and Peru. Reductions in rye and oats production for Russia more than offset an increase for barley.

Global coarse grain consumption for 2015/16 is reduced with the biggest reduction for Russia, down 1.2 million tons with lower rye, oats, and corn consumption reflecting tighter supplies with the smaller crops. Corn consumption for South Africa is lowered 0.7 million tons with reduced supplies. Corn consumption is also lowered for Saudi Arabia, Argentina, and Pakistan.

Global coarse grain imports for 2015/16 are raised with increases for South Africa, Mexico, and Peru corn more than offsetting reductions in corn imports for China and Saudi Arabia. Corn exports are raised for Brazil, Mexico, and Ukraine, but lowered for South Africa, India, and Russia. Corn exports are also raised for Argentina and Brazil for the 2014/15 (March 2015 through February 2016 local year) further reducing prospects for 2015/16 U.S. corn exports (September 2015 through August 2016). Global 2015/16 corn ending stocks are projected 2.9 million tons lower with reductions for Brazil, China, South Africa, Pakistan, Russia, Argentina, and Saudi Arabia. World corn ending stocks remain record large at 208.9 million tons; however, more than half of those stocks are held in China.

OILSEEDS: U.S. oilseed production for 2015/16 is estimated at 116.2 million tons, down 1.5 million from last month. Smaller crops for soybeans, canola, and cottonseed are only partly offset by increases for sunflowerseed and peanuts. Soybean production is estimated at 3,930 million bushels, down 51 million on lower harvested area and yields. Harvested area is estimated at 81.8 million acres, down 0.6 million from the previous forecast. Yield is estimated at 48.0 bushels per acre, down 0.3 bushels, but still a record. With lower supplies, exports are reduced 25 million bushels to 1,690 million. Ending stocks are projected at 440 million bushels, down 25 million from last month. Although soybean crush is unchanged, soybean meal production is reduced on a lower extraction rate. Soybean meal exports are reduced on a slowing pace of sales and increased competition from Argentina. Soybean oil balance sheet changes include increased production on a higher extraction rate, increased imports, and increased domestic use.

The 2015/16 U.S. season-average farm price forecast for soybeans is projected at $8.05 to $9.55 per bushel, down 10 cents at the midpoint based on prices reported to date. Soybean meal is forecast at $270 to $310 per short ton, down 20 dollars on both ends. The soybean oil forecast is unchanged at 28.5 to 31.5 cents per pound.

Global oilseed production for 2015/16 is projected at 526.9 million tons, down 2.0 million with lower forecasts for soybeans, sunflowerseed, peanuts, and cottonseed. Global soybean production is projected at 319.0 million tons, down 1.1 million on smaller crops in the United States and South Africa. Larger soybean production in China is partly offsetting. Global sunflowerseed production is reduced with lower projections for Argentina and South Africa partly offset by an increase for Russia. Other changes include reduced cottonseed production for China, India, and Pakistan.

Global oilseed trade for 2015/16 is projected at 148.0 million tons, up 0.3 million from last month. Increased soybean exports for Argentina and increased soybean and rapeseed exports for Canada more than offset lower U.S. soybean exports. Global oilseed crush is projected higher mainly on increased soybean crush for Argentina, China, and Vietnam and increased rapeseed crush for Canada and China. Global oilseed stocks are projected at 90.9 million tons, down 4.2 million on reduced soybean stocks for the United States, Argentina, and China, and reduced rapeseed stocks for Canada.

WHEAT: Feed and residual use for 2015/16 is lowered 30 million bushels reflecting disappearance for June-November as indicated by the December 1 stocks released in the Grain Stocks report. Seed use is lowered 6 million bushels on the winter wheat planted area reported today in the Winter Wheat Seedings report. U.S. supplies for 2015/16 are lowered 6 million bushels on reduced imports and slightly lower beginning stocks. Projected 2015/16 ending stocks are raised 30 million bushels. The 2015/16 season average farm price range is narrowed 10 cents on both the high and low ends to $4.90 to $5.10 per bushel.

Global wheat supplies for 2015/16 are raised 1.2 million tons on both increased beginning stocks and production. World wheat production remains record high and is raised 0.5 million tons led by 0.5-million-ton increases for both Russia and Pakistan and a 0.3-million-ton increase for the EU. Partly offsetting is a 0.7-million-ton reduction for Uruguay and a 0.4-million-ton reduction for Brazil; both reductions are on updated government statistics and reflect crop damage from excessive rain. World wheat trade for 2015/16 is down fractionally with several, mostly offsetting, changes. Global use is reduced, mostly in the United States. With supplies increasing and use reduced, ending stocks are raised 2.2 million tons to a record 232.0 million tons. This total is 9 percent larger than the previous stocks record set last year.

 

2015-16 USDA U.S. Yield (bu/acre)
 
USDA Jan
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Dec
2015-16
Corn
168.4
169.2
167.7-170.1
169.3
Soybeans
48.0
48.3
47.5-49.0
48.3
Wheat
43.6
 
 
43.6

 

2015-16 USDA U.S. Production (bln bu)
 
USDA Jan
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Dec
2015-16
Corn
13.601
13.648
13.525-13.770
13.654
Soybeans
3.930
3.980
3.926-4.043
3.981
Wheat
2.052
 
 
2.052

 

2015-16 USDA U.S. Grain Carryout (bln bu)
 
USDA Jan
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Dec
2015-16
Corn
1.802
1.783
1.506-2.010
1.785
Soybeans
0.440
0.471
0.407-0.563
0.465
Wheat
0.941
0.918
0.853-0.947
0.911

 

U.S. Quarterly Grain Stocks (bln bu)
 
USDA
Jan 2016
Average Trade Est.
Range of
Trade Est.
USDA
Jan 2015
Corn
11.212
11.242
11.073-11.440
11.211
Soybeans
2.715
2.731
2.590-2.900
2.528
Wheat
1.738
1.696
1.647-1.732
1.530



2015-16 USDA World Grain Carryout (million tons)
 
USDA Jan
2015-16
Average Trade Est.
Range of
Trade Est.
USDA Dec
2015-16
Corn
 208.94
212.43
208.0-218.5
211.85
Soybeans
79.28
82.57
80.5-84.5
82.58
Wheat
232.04
229.25
225.0-231.0
229.86

 

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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.