Domestic corn prices for 2015-16 have been raised by 5 cents, bringing the anticipated season-average corn price to a range of $3.50-4.10 a bushel, USDA officials said in October’s World Agricultural Supply and Demand Estimates (WASDE) report.
“[US] corn production came down, but there was no adjustment to the new crop demand,” said Chad Hart, associate professor of economics, crop markets specialist and extension economist at Iowa State University. “Supplies got smaller, but demand stayed the same, so that’s what we saw in prices.”
Although domestic demand for soybean meal increased, supply also grew with an increase in soybean crush, he told FeedNavigator.
“From the corn perspective we did see a little tightening of that market, and a bounce in USDA numbers, but we’re still looking at low corn prices through the 2016 calendar year,” he said. “And we’re seeing the same thing from the soybean meal market.”
However, on the global level, total grain and soybean supplies were actually increased, resulting in early futures market reactions being limited, said Helen Plant, analyst with the UK’s Agriculture and Horticulture Development Board (AHDB).
The biggest change in the current WASDE report, in terms of US grains, was a reduction in the number of acres harvested, said Hart. Overall acreages were down for both corn and soybeans.
In the US, corn production was reduced by about 437,000 acres and soybeans by 1.1m acres, said the USDA’s report.
An increase of 0.5 bushels an acre for corn in the US is expected to partially offset the reduction in acres, said the US agency. The boost per acre is anticipated to bring the yield per acre to 168 bushels.
For US soybean output, the yield is forecast slightly up from September raising amounts to 47.2 bushels an acre, and the higher per-acre yields are expected to partly offset the reduction in area harvested, USDA officials said.
Projected 2015-16 corn production is expected to be slightly down, with the production forecast dropping by about 30m bushels, they continued. Ending stocks are set to be 31m bushels lower, bringing total amounts to about 1.6b bushels.
“One of the things that I was watching was if USDA would make any big adjustments for demand for feed markets in corn and they didn’t,” said Hart. “They left everything alone.”
Although, feed demand [in the US] is slightly down from last year, it remains strong, he said.
On a global level, corn beginning stocks have been lowered 1.2m tons, because of higher feeding in the EU during 2014-15 and exports, said the USDA team. Corn production for 2015-16 has been lowered for several countries, which is expected to offset a larger crop in Brazil.
“Global 2015-16 corn ending stocks are projected 1.9m tons lower at 187.8m, 8.2m lower than in 2014-15,” they added.
Estimates for domestic soybean production for 2015-16 have dropped 47m bushels to an amount of about 3.9b bushels, said the authors of the report.
Additionally, soybean supplies for 2015-16 in the US are estimated to be 66m bushels lower than previous indications, with reduced beginning stocks and production, they said. Soybean exports have been reduced by 50m bushels for 2015-16, based on slow sales and competition.
“Soybean crush is projected at 1,880m, up 10m on higher domestic soybean meal disappearance, which is raised in line with an increase for 2014-15,” USDA officials said in the report. “Soybean ending stocks for 2015-16 are projected at 425m bushels, down 25 million.”
The increase in soybean crush means more soybean meal will be on the US market, but, demand for meal also increased, said Hart.
“When you look at the [US] livestock numbers, they were showing increased numbers there in production as we look forward into 2016,” he added. “There’s more feed demand out there, and that’s what is holding the soybean meal market in balance.”
Global oilseeds outlook
Global soybean production is projected at a record 320.5m tons, up 0.9m with higher Brazil production only partly offset by lower projections for the US, India, and Ukraine.
“Brazil soybean production is projected at a record 1m tons on higher area. A sharp decline in the value of the Brazilian real recent months is expected to lead to increased area despite lower international soybean prices this year.
Soybean crops in Ukraine and India are reduced on lower projected yields. Rapeseed production for Canada is projected at 14.3m tons, up 1.0m based on higher yields reported in the most recent survey from Statistics Canada,” forecast the USDA team.
Wheat production changes
Wheat ending stocks for 2015-16 have dropped by 14m bushels stemming from lowered production, USDA officials said. Amounts produced are estimated to decrease 84m bushels while feed and residual use expectations have been lowered by 20m bushels.
“Exports are lowered 50m bushels to 850m on a slow sales pace to date and continued lack of US price competitiveness, particularly compared to Black Sea Countries and EU,” said the USDA review.
The season average price range for 2014-15 has dropped 10 cents on the high and low ends for a range of $4.75 to $5.25 a bushel, said the USDA experts.
However, global supplies are expected to increase by about 2m tons in 2015-16 based on boosted production and larger beginning stocks, they added. The largest increases are attributed to Australia, Canada and the EU.
Australia had sufficient sub-soil moisture that allowed it to withstand a drier-than-normal September, said the report. The USDA team said increased yield potential there is supported by satellite imagery.
The global wheat crop is now projected at 732.8 million tons, the third consecutive record.
“World wheat exports for 2015/16 are raised 3.0m tons with increases for several key US competitors. Ukraine is raised 1.5m tons on a larger crop. Canada exports are raised 1.0m tons, and Australia, the EU, Kazakhstan, and Russia are each raised 0.5 million tons.
These increases are based on larger supplies and export pace to date. Partly offsetting is a 1.4m ton reduction for the US and a 0.5m ton decline for Argentina. Imports are raised 1.0m tons in Iran on the elimination of an import duty and 0.5m tons in Syria because of distribution problems.”