Tuesday, May 10, 2016

USDA World Agricultural Supply and Demand Estimates, May 10, 2016: Grains Explode Higher

These hit the tape at 12:00 EDT. Corn is up 10'2; wheat up 6'0 and soybeans up 37'2
From The US Department of Agriculture:
Note: This report presents USDA’s initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for 2016/17. Also presented are the first calendar-year 2017 projections of U.S. livestock, poultry, and dairy products. Due to spring planting still underway in the Northern Hemisphere and being several months away in the Southern Hemisphere, these projections are highly tentative. Forecasts for U.S. winter wheat area, yield, and production are from the May 10 Crop Production report. For other U.S. crops, the March 31 Prospective Plantings report is used for planted acreage. Methods used to project 2016/17 harvested acreage and yield are noted in each table.

WHEAT: U.S. wheat supplies for 2016/17 are projected up 6 percent from 2015/16 on higher beginning stocks and imports. All wheat production is projected at 1,998 million bushels, down 3 percent. The year to-year

decrease is due to a sharp reduction in planted area that more than offsets increased yields. The
all wheat yield is projected at 46.7 bushels per acre, up 7 percent from the previous year. The surveybased forecast for 2016/17 winter wheat production is up with higher yields more than offsetting reduced harvested area. Winter wheat has benefited from excellent spring growing conditions and yields are projected higher for Hard Red Winter, Soft Red Winter, and White Winter. Spring wheat and Durum production for 2016/17 is projected to decline 16 percent on lower area, as well as a return to trend yield, which is below last year’s level.

Total U.S. wheat use for 2016/17 is projected up 7 percent from the previous year on higher exports, feed and residual use, and food use. The 2016/17 exports are projected at 875 million bushels, up 95 million bushels from the previous year’s low level but still well below average. Large supplies in several major competing countries will continue to limit U.S. exports. Feed and residual use is projected up 30 million bushels on increased supplies. U.S. ending stocks are projected to rise 51 million bushels from the elevated 2015/16 total to 1,029 million, the highest since the 1987/88 crop year. The all wheat season average farm price is projected at $3.70 to $4.50 per bushel; the mid-point of this range is the lowest in 11 years.

Global wheat supplies are projected to rise 2 percent from 2015/16 as increased beginning stocks more than offset a decline in production from the previous year’s record. Total wheat production is projected at 727.0 million tons, the second highest total on record. Large crops are expected in most key competing countries and favorable spring growing conditions suggest that yields will be well above trend in the EU, Russia, and Ukraine. Global wheat consumption for 2016/17 is projected slightly higher than in 2015/16 with higher food use more than offsetting a reduction in world wheat feeding. Global import demand for 2016/17 is down from last year’s record, but still very large. Global ending stocks for 2016/17 are projected at a record 257.3 million tons, up 14.4 million from 2015/16.

COARSE GRAINS: U.S. feed grain supplies for 2016/17 are projected up 4 percent from the 2015/16 record with increases in both beginning stocks and production. Corn production for 2016/17 is projected at 14.4 billion bushels, up 829 million from 2015/16 and 214 million higher than the previous record in 2014/15. A 5.6-million-acre increase in corn plantings more than offsets a small reduction in yield. The U.S. corn yield is projected at 168.0 bushels per acre, down 0.4 bushels from 2015/16. Corn supplies for 2016/17 are projected at a record 16.3 billion bushels, up 886 million from 2015/16, which more than offsets projected declines for sorghum, barley, and oats.
U.S. corn use for 2016/17 is projected at a record 14.1 billion bushels, 4 percent higher than for 2015/16.
Feed and residual use for 2016/17 is projected 300 million bushels higher with higher production, lower expected prices, and further expansion in animal numbers in 2016/17. Corn used to produce ethanol is projected 50 million bushels higher than in 2015/16 with a reduction in sorghum use for ethanol and higher expected ethanol blending. Exports for 2016/17 are projected 175 million bushels higher than this month’s upwardly revised projection for 2015/16. More competitive prices and reduced supplies and competition from Brazil support gains in U.S. exports for 2016/17 and 2015/16. U.S. corn ending stocks for 2016/17 are projected at 2.2 billion bushels, up 350 million from the 2015/16 projection. If realized,
stocks would be the highest since the mid-1980s; however, the stocks-to-use ratio remains far lower than in those years when domestic support policies ballooned stocks to more than 50 percent of annual usage. 
The season-average 2016/17 farm price is projected at $3.05 to $3.65 per bushel, down 25 cents at the midpoint from this month’s slightly higher outlook for 2015/16.

Global coarse grain supplies for 2016/17 are projected at a record 1,543.2 million tons, up 41.0 million tons from 2015/16 with nearly half of the increase on larger U.S. beginning stocks and production. Global corn production for 2016/17 is projected at 1,011.1 million tons, up 42.2 million from 2015/16, and just short of the record 1,013.5 million in 2014/15. In addition to the projected 21.1-million-ton U.S. increase, 2016/17 corn production is also higher for most of the world’s major producing countries with production rebounds for South Africa and EU, and higher area in Argentina, Russia, and Ukraine. Brazil corn production for 2016/17 is 1.0 million tons higher than this month’s lowered outlook for 2015/16 as area is expected to decline slightly, but yields rise from those now expected for the 2015/16 crop. Partly offsetting these increases for 2016/17 is a 6.6-million-ton reduction for China corn, as changes in support policies and lower domestic prices reduce incentives for corn planting.

Global corn consumption for 2016/17 is projected at a record 1,011.9 million tons, 43.0 million tons higher than in 2015/16. The largest increases are for China with consumption projected up 9.5 million tons and the United States with consumption projected up 9.2 million tons. Smaller increases are projected for EU, Argentina, Brazil, India, Russia, Vietnam, Mexico, and South Korea.

Global corn exports for 2016/17 are higher with increases for Argentina, EU, and Ukraine more than offsetting a reduction for Brazil. Corn imports for 2016/17 are lower with declines for South Africa, EU, Vietnam, and China partly offset by increases for Mexico, Turkey, Egypt, Iran, and South Korea. Much of the imbalance in global marketing year imports and exports is driven by the timing of Brazil and Argentina exports and the South Africa change from a net importer to a net exporter. The 2016/17 local marketing years for these Southern Hemisphere exporting countries do not start until 2017, while the local marketing years for many major importers begin in October 2016. Corn shipments by Southern Hemisphere exporters between October 2015 and February 2016 were strong, appearing as 2014/15 exports, but accounted for as 2015/16 imports. Reduced 2015/16 Brazil second-crop corn limits export prospects between October 2016 and February 2017. As a result, global imports decline in 2016/17 at the same time that U.S. exports expand. Global 2016/17 corn ending stocks are projected at 207.0 million tons, down slightly from the 207.9 million for 2015/16. Lower stocks in China, EU, and Brazil more than offset the projected U.S. increase.

RICE: U.S. 2016/17 all rice production is forecast at 231.0 million cwt, up 38.7 million cwt from the previous year and the largest since 2010/11. The increase reflects larger area and a higher yield. Longgrain harvested area is forecast at 2.4 million acres, up 32 percent from the previous year and the largest in six years. Combined medium- and short-grain harvested area is forecast at 0.6 million acres, down 17 percent from 2015/16 due to a sharp reduction in southern medium-grain planted area. The yield increase for both classes of rice reflects a return to trend. Total U.S. 2016/17 all rice supplies are forecast to increase 13 percent from the previous year. Long grain supplies are up, while medium- and short-grain supplies are down....MUCH MORE