USDA: wheat, corn stocks predicted to grow as exports fall

By Aerin Einstein-Curtis

- Last updated on GMT

© GettyImages/photoschmidt
© GettyImages/photoschmidt

Related tags WASDE feed grains

The USDA predicts larger domestic supplies of corn and wheat from export market challenges while ending stocks for soybeans drop and producers watch spring weather.

The US Department of Agriculture (USDA) released details of feed crop production and trade in Friday’s [March 8] World Agricultural Supply and Demand Estimates report​.

Overall, US the 2018/19 corn and wheat crops are expected to see a reduction in use and increasing challenges in the export market, the USDA reported. However, soybeans are forecast to see increased domestic use and a drop in total stocks.

Challenges planting the winter wheat crop also could cause a shift of some winter wheat acres moving into corn or soybean production later this spring, said Romulo Lollato, assistant professor in wheat and forages production with Kansas State University.

The overall winter wheat planting was down about half-a-million acres from past years and there could be some changes in late-planted wheat fields.

“We may see some abandonment if the producers have good moisture now, they might decide to go to a soybean crop or a corn crop at the expense of the wheat crop,”​ he added.

Prior to planting, there was interest from several producers to expand the amount of winter wheat acres, supported at the time by the favorable price ratio between soybean and wheat, he told us.

“We got a good start to the season from about mid-September to about very early October – we planted about half the area in the state – then it started to rain and didn’t stop,”​ he said. “There was little progress on the planting of the crop [and] we set a new record of late-planted crop.”

There also were challenges for producers who needed to harvest soybeans from wet fields before they could start planting the winter crop, he added.

The delayed portion of the planted wheat faced an additional challenge from below-average temperatures and snow, said Lollato.

“Snowfall is good to protect the crop, but it was so cold there was no development,”​ he added.

“Half the wheat crop was planted on time and it is looking excellent, with very good yield potential,” ​he said. “The other half, it’s way behind in development – The consequence for the crop behind in the development is that it’s going to be delayed in the spring.”

Weather may play the deciding role in how the second portion of the crop develops, he said.

Additionally, producers face potential challenges in preparing for spring planting as frozen fields or the presence of snow has delayed the application of fertilizer used either to prepare for wheat or corn planting, he said.    

Soybeans predictions

The forecast for soybeans in 2018/19 anticipates higher crush and a drop in ending stocks, said the USDA. Crush was increased by 10m bushels based on domestic use of soybean meal.

Export rates remain flat and overall stocks are forecast, down 10m bushels, to 900m bushels, the department said.

The season-average soybean price range remains $8.10 to $9.10 per bushel and soybean meal continues to have a range of $295 to $335 a short ton, the department said.

Globally, production and crush are anticipated to drop while stocks increase, the department said. Soybean production was lowered 0.9m tons based on Brazil and Paraguay.

Production in Brazil is expected to be down about 0.5m metric tons to 116.5m based on dry weather​ and reduced yields, the department said.

Soybean crush also is forecast to fall, mainly in response to crush rate in China, the department said. However, China’s crush pace is anticipated to pick-up in the latter half of the marketing year based on harvest in South America.

Corn considerations

The outlook for domestic corn use in 2018/19 anticipates growth in overall stocks and a decline in exports, the USDA said.

The US faces falling price competitiveness and export expectations were lowered 75m bushels to 2.375bn bushels, the department said. There also is anticipated to be a growth in exports from Brazil and Argentina.

With the drop in ethanol production and flat corn use in other areas, ending stocks were increased by 100m bushels to 1.8bn, the department said. The season-average corn price was dropped $0.05 at the midpoint to $3.55 a bushel.

Global coarse grain production in 2018/19 is thought to be down to 1.37bn metric tons, the department said. However, use is expected to increase as ending stocks fall.

Forecast corn production in Brazil is flat as a smaller production area is expected to be offset by higher yields, the department said. Corn production in India is anticipated to increase while it drops in South Africa.

However, the marketing year is expected to bring some changes in the global corn trade, with an increase in exports from Argentina and the Ukraine and falling exports from the US, the USDA said. Brazil’s exports for the marketing year that ended in February were increased with larger than anticipated late-season sales.

Imports to China in 2018/19 were reduced based on the expectation of less sorghum and barley being imported, but corn use is forecast to increase, the department said.

Corn imports to the EU and Canada are anticipated to expand, the department said. Overall, global corn ending stocks were reduced based on drops for China, Brazil and Argentina.

Thoughts on wheat and sorghum

US production of wheat in 2018/19 anticipates larger supplies, higher ending stocks and a drop in exports and domestic use, the USDA said.

Supplies are expected to increase by 5m bushels based on increased imports, and exports are predicted to drop 35m bushels as hard red spring wheat and white wheat face stronger competition than anticipated, the department said.

Domestic wheat use also is forecast to decline by about 5m bushels, the department said. Anticipated ending stocks for 2018/19 were raised by 45m bushels.

The season-average farm price range for wheat has a midpoint of $5.15 a bushel and a range of $5.10 to $5.20, the department added.

Depending on production of the planted winter wheat crop, there could be an improvement in wheat pricing, said Lollato. However, global supply may offset any boost stemming from reduced production in the US.

Globally, wheat supplies are anticipated to fall based on reduced production in Kazakhstan and Iraq, the USDA said. World consumption also is forecast to drop.

International exports are anticipated to increase slightly based on exports from the EU and Brazil, the USDA said. Imports are expected to grow in Algeria, Morocco and the Philippines and fall for Bangladesh, the EU, Mexico and Venezuela.

Domestic use of sorghum in feed is predicted to increase by 20m bushels, the department said. However, exports in 2018/19 were lowered 15m bushels – to 85m – the lowest level since 2012/13.

The midpoint price forecast was dropped $0.05 to $3.30 a bushel, the department added.

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