The July 12th USDA WASDE projections for the 2016-17 corn and soybean crops reflected actual planting data and recent crop progress reports. Harvest areas for corn and soybeans were raised by 1 percent and 2.3 percent respectively to 86.6 million acres and 83.0 million acres.
The corn harvest should attain a near record of 14,540 million bushels based on a yield of 168.0 bushels per acre. The “Feed and Residual” category was established to be 5,550 million bushels but the “Food and Seed” category was raised 5 million bushels as documented in the subsequent tables. Diversion of corn to ethanol was projected at 5,295 million bushels or 32.4 percent of the increased availability despite projections of lower U.S. fuel demand. It is evident that increased ethanol production will be exported. The corn “Exports” category was increased by 5.1 percent to 2,050 million bushels compared to the June WASDE Report. Residual corn stock was adjusted to 2,081 million bushels. The projected USDA range in farm price retained the 60 cent per bushel spread but decreased price by 10 cents per bushel on either end of the range compared to the June WASDE Report, attaining 310 to 370 cents per bushel.
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 4 percent higher than the May 2015 proposal of 17.4 billion gallons. The prevailing low oil price reflects a slowing of World economic activity and increased oil and gas production in North America coupled with unrestricted output from Saudi Arabia, lower production from Nigeria and Venezuela, resumption of supply from Iran, reduced impact of OPEC as contributory factors determining the balance between supply and demand.
At the close of trading on July 12th, CME quotations for July and September 2016 corn were 353 cents and 352 cents per bushel respectively, approximately 17 percent below the June values.
The area of soybeans to be harvested increased by 2.3 percent to 83.0 million acres, with a yield of 46.7 bushels per acre and a projected production of 3,880 million bushels. The “Beginning Stocks” category was revised down to 350 million bushels with a supply of 4,260 million bushels. The “Exports” category was lowered by 70 million bushels to 1,920 million bushels. Ending stock for soybeans was projected to be 290 million bushels due to changes in crushing and exports relative to availability. The USDA retained the ex-farm price for soybeans as projected in June to a range to 875 cents to 1,025 cents per bushel. At the close of trading on June 12th CME quotations for soybeans for July and September delivery were 1,107 cents and 1,182 cents per bushel respectively, approximately 6.3 percent below the June values.
Production of soybean meal was projected to be 45.675 million tons. Estimated soybean meal prices were raised $5 per ton in July to a range of $325 to $365 per ton. At the close of trading on July 12th, CME quotations for July and September 2016 soybean meal were $378 and $377 respectively, approximately 6.2 percent less than in June.
The price projections based on CME quotations for corn and soybeans suggest stable 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 will attain 1,302 million metric tons.
World production and use of total grains and oilseeds as summarized for the 2016/2017 season are:-
Factor m.tons. Coarse grains Oilseeds
Output 1,302 536
Supply 1,545 619
World trade 172 157
Use 1,303 462
Ending stocks 240 76
(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)
JULY 2016 WASDE #555 ESTIMATE FOR THE 2016/7 CORN HARVEST:
Harvest Area 86.6 m* acres (94.1 m. acres planted, corresponding to 92.0% of area harvested)
Yield 168.0 bushels per acre
Beginning Stocks 1,701 m. bushels
Production 14,540 m. bushels
Imports 40 m. bushels
Total supply 16,281 m bushels Proportion of Supply
Feed & residual 5,550 m. bushels 33.8%
Food & Seed 1,375 m. bushels 8.4%
Ethanol & byproducts 5,275 m. bushels 32.4 %
Domestic Use 12,150 m. bushels 74.6%
Exports 2,050 m. bushels 12.6%
Ending Stocks 2,081 m. bushels 12.8 %
Stock-to- domestic use proportion 17.2% (was 16.4 in the June WASDE Report)
Average Farm Price: $3.10 to $3.70 per bushel. (Down 10 cents on either end of the June WASDE range)
JULY 2016 WASDE #555 ESTIMATE FOR THE 2016/7 SOYBEAN HARVEST AND FOR SOYBEAN MEAL PRODUCTION:
Harvest Area 83.0m. acres (83.7 m. acres planted, corresponding to 99.0% of planted acreage )
Yield 46.7 bushels/acre
Beginning Stock 350m. bushels
Production 3,880 bushels
Imports 30m. bushels
Total Supply 4,260m bushels Proportion of Supply
Crushings 1,925m. bushels 45.1%
Exports 1,920m. bushels 45.1%
Seed 95 m. bushels 2.2%
Residual 30 m. bushels 0.7 %
Total Use 3,970 m. bushels 93.1%
Ending Stocks 290m. bushels 6.9%
Average Farm Price: 875 to 1.025 cents per bushel (Unchanged from the June WASDE Report)
Beginning Stocks 300 m tons
Production 45.675 m. tons
Imports 325 m. tons
Total Supply 46.300 m. tons
Domestic Use 33.800 m. tons
Exports 12.200 m. tons
Total Use 46.800 m. tons
Ending Stocks 300 m. tons
Average Price ex plant: $325 to $365 per ton (Up $5 per ton on either end of the June WASDE report)