WASDE: Wheat offers surprise as eyes turn to exports
The US Department of Agriculture (USDA) released its World Agricultural Supply and Demand Estimates (WASDE) report on Thursday (9 February).
Although final crop production numbers for the US were released in January, the February report offers some indicators about feed crop demand, said Todd Davis, assistant extension professor in crop economics marketing and management with the University of Kentucky.
He said the February WASDE predicted a slight reduction in US corn stocks, no change for soybean production and a surprising reduction for wheat based on export strength.
Much attention, he said, was also focused on South America as soy production is expected to be lower in Argentina. “The other sentiment is that USDA has not increased the Brazilian crop sufficiently,” Davis told FeedNavigator.
"Global soybean production is down 1.2m tons to 336.6m mainly on a 1.5m ton reduction for Argentina where heavy rain impacted the expected harvested area," forecast the USDA.
Corn and soy
Corn ending stocks were dropped by 35m bushels, said the USDA. And the season-average corn price was reduced to a range of $3.20 to $3.60.
Global production is up based on increases from Mexico and the Ukraine. “Mexico corn production is projected to be record high, as government data indicates higher planted area and a lower level of abandonment following a favorable summer growing season,” added the agency.
“Forecast 2016/17 corn feed and residual use for China is raised, reflecting sharply reduced imports of corn substitutes, relatively low internal market prices and efforts by the government to promote use of domestic supplies,” noted the USDA publication. “Foreign corn ending stocks are lowered from last month, with reductions for China and the EU only partially offset by increases for Paraguay and Mexico.”
US soybean supply and use is expected to remain the same with ending stocks at 420m bushels, forecast the US agency. Prices also are predicted to be steady.
Globally, production and ending stocks were lowered based primarily on a 1.5m tons reduction for Argentina due to heavy rain, said the USDA. Ukraine saw an increase in production from higher yields.
Wheat and other grains
Domestically, wheat stocks were reduced by 50m bushels to about 1.03bn bushels, said the USDA. Season average farm price was increased at the midpoint.
Global supplies were lowered by 4.2m tons based on crop reductions in India and Kazakhstan. Use was increased by 0.5m tons based on feed and residual use.
“Vietnam and China feed and residual use is raised 1.3m tons and 1m tons, respectively,” said the USDA. “With global supplies falling and total use increasing, world ending stocks are lowered 4.7 million tons this month.”
Sorghum prices dropped at the midpoint based on a weak relationship to corn prices - however, there is expected to be an increase in feed and residual use.
International sorghum production was lowered as producers turn to corn, according to the US agency. And barley production saw drops in Iran and an increase in Kazakhstan.
The US has seen better exports for soybeans than it did last year, likely because of flooding in Argentina and drought in Brazil, said Davis. However, US soybean exports are expected to decline at this point in the year as the South American harvest starts, he said.
“[Argentina and Brazil] have been wide adopters of GM seeds and no-till production systems, so, at the farm level, they’re competitive with the US, but post farm-gate they have some logistic problems to overcome. As far as corn, Japan and Mexico are larger customers for the US. And we have the decided advantage for shipping corn to Mexico," said Davis.
Corn exports were increased for countries including Ukraine and Canada, said the USDA. Imports were boosted for Iran and Vietnam.
In the US, strong exports reduced wheat stocks, said the USDA. Globally, exports were slightly reduced.
However, sorghum exports saw a downturn and export amounts were reduced by 25m bushels based on commitments through January.
“Global oilseed trade is projected up 0.7m tons to 161m tons,” the department said. “Increased exports of soybeans from Ukraine, rapeseed from Canada, and sunflowerseed from Argentina account for most of the change. Global oilseed stocks are projected lower, mostly reflecting reduced soybean stocks for Argentina and reduced rapeseed stocks for Canada.”