USDA: feed crop yields grow, prices don’t

The USDA released its updated World Agricultural Supply and Demand Estimates​ (WASDE) on Friday and noted that production, exports and usage are expected to increase for feed crops including corn, soybeans and wheat.

There was an expectation that corn and soybeans might see an increase in expected per acre yield, said Mike Deliberto, assistant professor in the department of agricultural economics and agribusiness with Louisiana State University and the LSU AgCenter. But, the size of uptick in yield for corn still came as a surprise. 

“[If you] look at how the corn crop was rated, 74% good and excellent and soybeans rated 72% good and excellent, and looked nationally, it got people thinking that we were going to have increased numbers,” ​he told FeedNavigator. “A lot of people expected it to be higher than it was last year.”​

“I heard 171 [bushels per acre], 172, or 173 I did hear 175 tossed around, but that was definitely higher than what people thought for corn,”​ he added.

Higher production for feed crops also has been suppressing some prices but encouraging exports, he said.  

Corn and soy​

US corn production has been set to a record 15.2bn bushels, an increase of 613m bushels from last month’s estimate, the USDA said. “The season’s first survey-based corn yield forecast, at 175.1 bushels per acre, is up 7.1 bushels from last month’s trend-based projection and above the record 171.0 bushels in 2014/15,”​ it added.

The boosted production also brings lower prices, said Deliberto. However, the improved production makes the corn crop more attractive on the international market even if ending stocks are higher.

“When you think about corn and put it in a global perspective – what does the global situation look like?”​ he said. “Look at conditions in Brazil – Brazil imports are going to be up because of tight use and wet conditions – those exports numbers will reflect competitive prices and Brazil not putting a lot on the market.” ​

Corn use in 2016/17 has been raised by 300m bushels to a record 14.5bn, the department said. Feed and residual use is expected to improve by 175m bushels from the larger crop and lower prices.

“The projected range for the season-average corn price received by producers is lowered 25 cents on both ends to $2.85 to $3.45 per bushel,” ​said the USDA. “This would be down 45 cents at the midpoint from the $3.55 to $3.65 per bushel range now expected for 2015/16.” ​

 However, exports are expected to increase by 125m bushels based on the more competitively priced crop, the department said.  Ending stocks are set to grow by 328m bushels.

Soybean production for 2016/17 has been raised to 4.06bn bushels based on increased yields, the USDA said. Yield per acre was raised 2.2 bushels from last month, and is ahead of last year’s record.

“Despite higher use we’re going to see higher soybean stocks, when you have increased production of a commodity – that’s going to suppress price,” ​said Deliberto. “However the soybean market has seen some increased interest of late and USDA made a little revision to the 2015/16 export sales based on strong export sales and a slowing of the exports from South American ports.”​

Soybean supplies in 2016/17are expected to be a record 4.364bn bushels, said the USDA. Crush is predicted to increase based on improved use and exports, but ending stocks also have been raised.

The season-average price for 2016/17 has been lowered to a range of $8.35-$9.85 and meal prices were reduced $20 at the midpoint to a range of $305-$345 per short ton, the department said. 

However, there still could be some changes in the soybean crop as time does remain before the soybean harvest, said Deliberto.

Wheat ​

US wheat production has been increased, said the USDA. However, boosted use is predicted to offset production and ending stocks have been lowered.

Season average farm prices have been dropped to a range of $4.05-$3.35 a bushel, the department said.

Imports have been reduced by about 5m bushels based on the larger US spring wheat crop, the USDA said. Feed and residual use is expected to increase by 30m bushels also from the larger crop.

Exports are anticipated to increase by 25m bushels to about 950m bushels overall, the department said. The export upturn is based on the drop in EU wheat production and improved competitiveness of US wheat.

Global production ​

Internationally, corn has seen an increase in beginning stocks and production, the USDA said. There was a drop in corn feeding in 2015/16 for countries including Indonesia, Canada and the Ukraine and production growth in the EU and South Africa.

Corn feed use has grown in Mexico, India and the EU but was reduced in Indonesia, the department said.

“Global 2016/17 coarse grain ending stocks are projected 13.4m tons higher reflecting larger corn and barley stocks,”​ the department said. “Global corn stocks are projected 12.4m tons higher with the United States accounting for two-thirds of the increase.”​

Soybean production worldwide is expected to reach a record 330.4m tons, the department said. And, global oilseed supplies for 2016/17 have been increased by 8.1m tons from improved production and larger beginning stocks.

Globally, wheat supplies have been increased by 2.3m tons for 2016/17, but ending stocks have been lowered by 0.9m tons, said the USDA. The growth stems from improved production in several countries including Russia, Ukraine, Kazakhstan, Australia and Canada.

The increase is partially offset by decreased beginning stocks and the downturn in production in the EU, the department said. French yields are thought to be lowest seen in about 30 years.

Global trade is expected to grow by 2.3m tons with improved exports from Russia, which is anticipated to be the largest exporter of wheat in the world for the first time, the department said.