The February 9th 2017 USDA WASDE projections for the 2016/7 corn and soybean crops reflected actual harvest data. Areas for corn and soybeans were unchanged at 86.7 million and 82.7 million acres respectively.
The USDA retained corn and soybean yields as 174.6 bushels per acre and 52.1 bushels per acre. Ending stocks for corn and soybeans were projected at 2,320 million bushels and 420 million bushels respectively.
The corn harvest attained a near record of 15,148 million bushels. None of the major categories of use were appreciably changed as is normal for a post-harvest WASDE report. The projected USDA range in farm price incorporated a 40 cent per bushel spread and price was raised by 10 cents per bushel on the low end and down 10 cents per bushel on the high end compared to the January 2016 WASDE Report, attaining 320 to 360 cents per bushel. At the close of trading on February 12th, CME quotations for March and May 2017 corn were 374 cents and 382 cents per bushel respectively.
The RFS for 2016 was belatedly determined to be 18.11 billion gallons by the EPA on November 30th 2015 (See Editorial in CHICK-CITE). The value was four percent higher than the May 2015 proposal of 17.4 billion gallons. It is doubtful that the incoming Administration will alter existing RFS levels given support of the Midwest agricultural sector to the election outcome and reinforced by assurances to corn-state legislators in early January 2017.
A wild card will be the influence of the nominees for the EPA-Director and Secretary of Energy, both of whom favor the oil and refining industries of their home states and both have opposed the RFS. Business associates of the President-elect have recently commented adversely on the system of Renewable Identification Numbers (RINs) which affect the profitability of many domestic refineries. The coming year should emerge as an interesting exercise in power shifts with very little precedent to indicate future policy, giving rise to a potential soap opera to be called As the Swamp Drains.
The prevailing but stable historically low oil price reflects a slowing of World economic activity and increased oil and gas production in North America. Supply is a function of now restricted output from Saudi Arabia, lower production from Nigeria and Venezuela, resumption of supply from Iraq and Iran, and interference by Russia in Mideast affairs. Reduced output according to an OPEC “agreement” in early December are all contributory factors, determining the balance between supply and demand which is important to the livestock industry as oil price is correlated to grain prices. The WTI fluctuated between $50 and $54 per barrel during the past month.
USDA documented a soybean harvest of 4,307 million bushels. Use parameters were unchanged from the January WASDE Report. USDA adjusted the ex-farm price for soybeans from February 2016 projections to a range of 910 cents to 990 cents per bushel. At close of trading on February 12th CME quotations for soybeans for March and July 2017 delivery were 1,053 cents and 1,064 cents per bushel respectively.
Production of soybean meal was unchanged at 45.411 million tons. Estimated soybean meal prices were narrowed over a range of $310 to $340 per ton. At the close of trading on February 12th, CME quotations for March and July 2017 soybean meal were $341 and $346 respectively. The price projections based on CME quotations for corn and soybeans suggest stable to slightly higher production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic use and exports.
For each 10 cents per bushel change in corn:-
The cost of egg production would change by 0.45 cent per dozen
The cost of broiler production would change by 0.25 cent per live pound
For each $10 per ton change in the cost of soybean meal:-
The cost of egg production would change by 0.40 cent per dozen
The cost of broiler production would change by 0.25 cent per live pound.
The USDA is able to provide a reasonably accurate projection of World supply and demand for coarse grains and oilseeds based on the status of crops in the Southern Hemisphere. Global coarse grain production was virtually unchanged to 1,329 million metric tons. The USDA predicts increased output of corn from Serbia but with lower output from Bolivia due to drought. Reduced production of barley in Argentine is expected.
Oilseed trade will increase by 0.4 million tons due to exports from Brazil and Canada.
Updated World production and use of total grains and oilseeds as summarized for the 2016/2017 season are:-
Factor m.tons. Coarse grains Oilseeds
Output 1.329 554
Supply 1.575 643
World trade 186 161
Use 1.324 469
Ending stocks 250 92
(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)
FEBRUARY 2017 WASDE #562 ESTIMATE FOR THE 2016/7 CORN HARVEST:
Harvest Area 86.7 m* acres (94.0 m. acres planted, corresponding to 92.2 % of area harvested)
Yield 174.6 bushels per acre (was 173.4 in the December Report)
Beginning Stocks 1,737 m. bushels
Production 15,148 m. bushels
Imports 55 m. bushels
Total supply 16,940 m bushels Proportion of Supply
Feed & residual 5,600 m. bushels 33.0%
Food & Seed 1,445 m. bushels 8.5%
Ethanol & byproducts 5,350 m. bushels 31.5 %
Domestic Use 12,395 m. bushels 73.0%
Exports 2,225 m. bushels 13.3%
Ending Stocks 2,320 m. bushels 13.7 %
Stock-to- domestic use proportion 18.8% (was 19.1% in the January WASDE Report)
Average Farm Price: $3.20 to $3.60 per bushel. (Up 10 cents on high end and down 10 cents on low end of the January WASDE range)
FEBRUARY WASDE #562 ESTIMATE FOR THE 2016/7 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:
Harvest Area 82.7m. acres (83.4 m. acres planted, corresponding to 99.2% of planted acreage )
Yield 52.1 bushels/acre (was 52.5 in December Report)
Beginning Stock 197m. bushels
Production 4,307m bushels
Imports 24m. bushels
Total Supply 4,528m bushels Proportion of Supply
Crushings 1,930m. bushels 42.6%
Exports 2,050m. bushels 45.2%
Seed 95 m. bushels 2.1%
Residual 33 m. bushels 0.7 %
Total Use 4,108 m. bushels 90.6%
Ending Stocks 420m. bushels 9.4%
Average Farm Price: 910 to 990 cents per bushel (Up 10 cents per bushel on low end and down 10 cents on the high end of the December WASDE Report)
Beginning Stocks 264 m tons
Production 45.411 m. tons
Imports 325 m. tons
Total Supply 46.000 m. tons
Domestic Use 34.100 m. tons
Exports 11.600 m. tons
Total Use 45.700 m. tons
Ending Stocks 300 m. tons
Average Price ex plant: $310 to $340 per ton (Up $5 per ton on the low end and down $5 on the high end of the January WASDE report)