USDA releases WASDE report

US grain market: Water and heat stress may herald a reduction in yields

By Aerin Einstein-Curtis

- Last updated on GMT

© iStock/Taglass
© iStock/Taglass

Related tags Wheat

Dry weather, high temperatures bring concerns for some US feed crop producers, says state climatologist.

Details on US feed crop production and international exports and supplies were included in the World Agriculture Supply and Demand Estimates report​ released Wednesday by the US Department of Agriculture (USDA).

Overall the outlook for US corn production calls for larger supplies, feed use and larger ending stocks for 2017/18, and soybean production also has been raised. However, the USDA forecast that wheat will have reduced supplies.

However, at this point in the crop production season for the US, many producers are watching the weather, said Laura Edwards, South Dakota State University Extension state climatologist. The Northern Plains region US has been experiencing reduced precipitation and drought conditions​.

“We’re in the wait and see game,” ​she told FeedNavigator. “There was a little rain that came through yesterday, but it won’t make up for the deficit with high temperatures.”

The region has already had damage and losses in spring wheat and winter wheat crops, she said. However, the remaining winter wheat crop is offering a decent yield with good protein levels.

“The next crops that we’re looking at will be corn and soybeans,” ​she said. “The forecast is for warmer than average temperatures and dryer than average conditions – this time of year corn is tasseling and that’s a water intensive crop development stage for corn. If we’re suffering from water stress and heat stress there may be some yield reductions.”

Production for the feed crop has slowed in recent weeks in that region, said Edwards. The soybean crop also shows signs of drought-stress with small plants and thin strands.

“Usually our wettest time of year is May to early July,” ​she said. “This is the worst time to be dry – our ag systems aren’t designed to be dry this time of year.”

Corn details

The US forecast for corn in 2017/18 is larger supplies, higher ending stocks and increased use in feed, said the USDA. Production is predicted to be 190m bushels larger than the prior marketing year based on planted and harvested areas.

“Corn beginning stocks are raised 75m bushels reflecting lower feed and residual use in 2016/17, based on indicated disappearance during the first three quarters of the marketing year,” ​the department said.

There are some concerns regarding weather, though, as “harvested-area weighted precipitation”​ in several corn growing states was less than average, although not an “extreme deviation,” ​noted the USDA's report. “For much of the crop the critical pollination period will be during middle and late July."

The agency predicted that feed use will increase as the larger crop brings lower prices. Corn ending stocks grew by 215m bushels from prior estimates.

The USDA lowered the season average corn price for producers by $0.10 at the midpoint, to set a range of $2,90 to $3.70 a bushel.

Production of corn in the EU has been lowered reflecting heat and dryness during grain fill in Spain.  

Though, the agency raised foreign corn ending stocks from last month, with the largest increases seen, primarily, in Vietnam, Mexico, and Argentina.

Soy specifics

US oilseed production, including soybeans and canola, for 2017/18 is expected to increase to about 127m tons, the USDA said. Soybean production has been increased by 5m bushels from increased harvested area, while yield remains 48 bushels an acre.

However, it expects supplies to drop by about 35m bushels from reduced beginning stocks.

“Soybean exports for 2016/17 are projected at 2.1bn bushels, up 50m, reflecting shipments and outstanding sales through early July. Soybean crush is reduced 10m bushels to 1.9bn on lower projected soybean meal exports and domestic use.”

The USDA raised the season average soybean prices by $0.10 at the midpoint to a range of $8.40 to $10.40 and the forecast price for soybean meal by $5 at the midpoint to a range of $300 to $340 a short ton.

Globally, the oilseed forecast is for increased production, exports and stocks, with an uptick in soybeans harvested in China, it added. Ending stocks for 2017/18 were raised by 1m tons with growth in stores in China and South America.

Wheat predictions

The USDA expects lower wheat supplies in 2017/18, by about 64m bushels.

“The production forecasts for durum and other spring wheat indicated a significant decline compared to last year for these two classes primarily due to severe drought conditions affecting the Northern Plains​.

“Partially offsetting this decrease is higher winter wheat production on both higher harvested acreage and yield.”

The agency also lowered export projections for wheat, by 975m bushels, while it reduced projected feed and residual usage by 150m bushels based on the limits in durum and spring wheat supplies.

It raised wheat ending stocks for 2017/18 by 14m bushels, but they remain 21% lower than revised ending stocks for the previous year, said the USDA.

Globally, wheat supplies also were lowered based on the reduced production expectations from the US, Australia, China and the EU, the department said. Russia and Turkey are predicting larger crops and higher exports.

“Total world consumption is projected higher, primarily on greater use by Russia on increased supplies,” ​the USDA said. “Global ending stocks are projected lower at 260.6m tons, down marginally from last month.”

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