The April 11th 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 to 174.6 bushels per acre and 52.1 bushels per acre. Ending stocks for corn and soybeans were projected at 2,320 million bushels (unchanged from March) and for soybeans 445 million bushels (up 0.5 percent) compared to the data in the March WASDE Report.
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 30 cent per bushel spread and price was up 5 cents per bushel on the low end and down 5 cents on the high end of the range compared to the March 2017 WASDE Report, attaining 325 to 355 cents per bushel. At the close of trading on April 11th, CME quotations for May and July 2017 corn were 367 cents and 374 cents per bushel respectively suggesting that the USDA projections may be low.
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 incoming EPA Administrator and the Secretary of Energy, both of whom favor the oil and refining industries of their home states and both have historically opposed the RFS. Business associates of the President-elect have recently commented negatively on the system of Renewable Identification Numbers (RINs) which affect the profitability of many domestic refineries. For April, USDA raised diversion of corn to ethanol by 50 million bushels.
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 2016 and subsequent negotiations between OPEC and Russia 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 in a narrow range of $51 to $53 per barrel during the past month with a sharp rise in early April.
USDA document a soybean harvest of 4,307 million bushels. Use parameters were essentially unchanged from the March WASDE Report which is typical for Spring projections. USDA narrowed the ex-farm price for soybeans from March 2016 projections to a range of 940 cents to 970 cents per bushel up 10 cents per bushel on the low end and down 10 cents on the high end of the range. At close of trading on April 11th CME quotations for soybeans for May and July 2017 delivery were 943 cents and 954 cents per bushel respectively.
Production of soybean meal was projected to be 45.586 million tons. Estimated soybean meal prices were adjusted to a range of $310 to $330 per ton. At the close of trading on April 11th, CME quotations for May and July 2017 soybean meal were $310 and $314 respectively. 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 was increased by 5 million m.tons to 1,346 million metric tons based on larger harvests in Brazil, South Africa, Indonesia, Pakistan and India. Oilseed production will increase by 5.4 million tons due to larger harvests in Brazil, Argentina and Paraguay.
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 1.346 563
Supply 1.593 654
World trade 191 165
Use 1.335 469
Ending stocks 258 99
(1 metric ton corn= 40 bushels) (“ton” represents 2,000 pounds)
APRIL 2017 WASDE #564 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
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 5,550 m. bushels 32.8%
Food & Seed 1,395 m. bushels 8.2%
Ethanol & byproducts 5,450 m. bushels 32.2 %
Domestic Use 12,395 m. bushels 73.2%
Exports 2,225 m. bushels 13.1%
Ending Stocks 2,320 m. bushels 13.7 %
Stock-to- domestic use proportion 18.7% (Unchanged from March WASDE Report)
Average Farm Price: $3.25 to $3.55 per bushel. (Up 5 cents on the low end and down 5 cents on the high end of the range compared to the March WASDE Report)
APRIL WASDE #564 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
Beginning Stock 197m. bushels
Production 4,307m bushels
Imports 24m. bushels
Total Supply 4,528m bushels Proportion of Supply
Crushings 1,940m. bushels 42.8%
Exports 2,025m. bushels 44.8%
Seed 104m. bushels 2.3%
Residual 14 m. bushels 0.3 %
Total Use 4,083 m. bushels 90.2%
Ending Stocks 445m. bushels 9.8%
Average Farm Price: 940 to 970 cents per bushel (Up 10 cents per bushel on low end and down 20 cents on the high end compared to the March WASDE Report)
Beginning Stocks 264 m tons
Production 45.586 m. tons
Imports 350 m. tons
Total Supply 46.200 m. tons
Domestic Use 34.000 m. tons
Exports 11.900 m. tons
Total Use 45.900 m. tons
Ending Stocks 300 m. tons
Average Price ex plant: $310 to $330 per ton (Down $10 per ton on the high end of the range compared to the March WASDE report)