The October 12th USDA WASDE projections for the 2016-17 corn and soybean crops reflected actual planting data and recent favorable crop progress reports. Harvest areas for corn was increased to 86.8 million acres but soybean acreage was unaltered. The USDA lowered corn yield by 0.6 percent to 173.4 bushels per acre but soybeans were raised by 1.5 percent to 51.4 bushels per acre. These adjustments in the October report contributed to a slight increase in ending stocks for corn to 2,320 million bushels and a bearish ending stock for soybeans of 395 million bushels.
The corn harvest should attain a near record of 15,057 million bushels despite a revised lower yield of 173.4 bushels per acre. The “Feed and Residual” “Food and Seed” and “Ethanol and By-products” categories were unaltered from September as documented in the subsequent table. Diversion of corn to ethanol was projected at 5,275 million bushels or 31.3 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 raised to 2,225 million bushels compared to the July through September WASDE Reports, presumably reflecting anticipated demand from Brazil.
This nation suffering from drought-impacted shortages has maxed-out imports from Argentina and Paraguay and is willing to receive GM-corn consignments from the U.S. despite the adverse currency exchange of 3.2 reals to the dollar. Residual corn stock was adjusted downwards from 2,384 million bushels to 2,320 million bushels. The projected USDA range in farm price incorporated a 60 cent per bushel spread and price was raised by 5 cents per bushel on either end of the range compared to the August WASDE Report, attaining 295 to 355 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 four percent higher than the May 2015 proposal of 17.4 billion gallons. The prevailing but stable historically 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, rumored collusion between that nation and Russia and reduced impact of OPEC all as contributory factors, determining the balance between supply and demand. Oil price is correlated to grain prices with WTI hovering at $50 per barrel over the past week.
At 14H00 EDT October 12th, CME quotations for December ‘16 and March ‘17 corn were 338 cents and 350 cents per bushel respectively, approximately three percent above the September values. Corn fell 6.5 cents per bushel after the noon release of the October WASDE.
The area of soybeans to be harvested remained at 83.0 million acres but with a revised estimate of yield at 51.4 bushels per acre with a projected production of 4,269 million bushels. The “Beginning Stocks” category was revised upwards to 197 million bushels with a supply of 4,496 million bushels. The “Exports” category was raised by 40 million bushels to 2,025 million bushels. Ending stock for soybeans was raised to 395 million bushels due to changes in crushing and exports relative to availability.
The USDA retained the ex-farm price for soybeans as projected in September to a range of 830 cents to 980 cents per bushel. At 14H00 after the noon release of the October WASDE, CME quotations for soybeans for November ‘16 and January ‘17 delivery were 952 cents and 960 cents per bushel respectively, approximately three percent below the August values.
Production of soybean meal was unchanged at 46.275 million tons. Estimated soybean meal prices were retained by the USDA to a range of $300 to $340 per ton. At 14H00 EDT on October 12th, CME quotations for October and December 2016 soybean meal were $296 and $298 respectively, approximately seven percent less than in September.
The price projections based on CME quotations for corn and soybeans suggest stable to lower 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 1,315 million metric tons and soybeans 548 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 1.315 548
Supply 1.561 635
World trade 181 159
Use 1.311 464
Ending stocks 249 88
(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)
OCTOBER 2016 WASDE #558 ESTIMATE FOR THE 2016/7 CORN HARVEST:
Harvest Area 86.8 m* acres (94.5 m. acres planted, corresponding to 91.9 % of area harvested)
Yield 173.4 bushels per acre (was 174.4 in September)
Beginning Stocks 1,738 m. bushels
Production 15,057 m. bushels
Imports 50 m. bushels
Total supply 16,845 m bushels Proportion of Supply
Feed & residual 5,650 m. bushels 33.5%
Food & Seed 1,375 m. bushels 8.2%
Ethanol & byproducts 5,275 m. bushels 31.3 %
Domestic Use 12,300 m. bushels 73.0%
Exports 2,225 m. bushels 13.2%
Ending Stocks 2,320 m. bushels 13.8 %
Stock-to- domestic use proportion 18.9% (was 19.4% in the September WASDE Report)
Average Farm Price: $2.95 to $3.55 per bushel. (Up 5 cents on either end of the September WASDE range)
OCTOBER 2016 WASDE #558 ESTIMATE FOR THE 2016/7 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:
Harvest Area 83.0m. acres (83.7 m. acres planted, corresponding to 99.0% of planted acreage )
Yield 51.4 bushels/acre (was 50.6 in September Report)
Beginning Stock 197m. bushels
Production 4,269m bushels
Imports 30m. bushels
Total Supply 4,496m bushels Proportion of Supply
Crushings 1,950m. bushels 43.4%
Exports 2,025m. bushels 45.0%
Seed 95 m. bushels 2.1%
Residual 31 m. bushels 0.7 %
Total Use 4,101 m. bushels 91.2%
Ending Stocks 395m. bushels 8.8%
Average Farm Price: 830 to 980 cents per bushel (Unchanged from the September WASDE Report)
Beginning Stocks 300 m tons
Production 46.275 m. tons
Imports 325 m. tons
Total Supply 46.900 m. tons
Domestic Use 34.300 m. tons
Exports 12.300 m. tons
Total Use 46.600 m. tons
Ending Stocks 300 m. tons
Average Price ex plant: $300 to $340 per ton (Unchanged from the September WASDE report)