February 18, 2018

January 2018 USDA Reports

January 12th, 2018

Summary:

Dec 1 US Grain Stocks (million bushels)
Last Year Average Estimate USDA - Jan 2018
Corn 12,386 12,431 12,516
Soybeans 2,898 3,181 3,157
Wheat 2,077 1,849 1,874
2017/18 US Ending Stocks
Corn 2,295 2,431 2,477
Soybeans 445 472 470
Wheat 960 959 989
Winter Wheat Seedings (million acres)
All Winter 32.696 31.307 32.608
HRW 23.426 22.327 23.1
SRW 5.733 5.555 5.980
US 2017/18 US Production
Corn Prod 15,148 14,579 14,604
Corn Yield 174.6 175.4 176.6
Soybean Prod 4,296 4,427 4,392
Soybean Yield 52.0 49.5 49.1

Video Analysis:

The four separate reports issued from USDA this morning all had the potential to impact markets. Today USDA revised planted acres, harvested acres, yields, and production for 2017. Second, the quarterly Grain Stocks release informs us how much is left over as of December 1. This tells the trade about usage in the first quarter of the year. WASDE, the monthly supply/demand then incorporates this new understanding about 2017 production and first quarter usage into the annual balance sheets we are all used to. Lastly, the wheat plantings report informs the trade about this past fall planting. The trade then updates its view over available acres for corn and soybeans for the coming spring.

Corn:

2017 Production: A minor 262,000 acre decline was noted for corn plantings, now at 90.167 million. Harvested was lowered by 416,000 to now 82.703 million. This is not unusual. Yields were raised from 175.4 to 176.6 bpa. This 0.7% increase over the November estimate is not out of bounds for a year that saw increases after August. Production was raised by a minor 26 million bushels to now 14.604 billion.

December 1 Grain Stocks: USDA counted 12.516 billion bushels of old crop still around after one quarter of use. With a new production number, and known corn for ethanol and export numbers, we can now fill in the blank for Sep – Nov feed/residual. These new numbers would imply 2.306 billion for Q1 feed/residual, 1.4% over last year. Despite expansion in all livestock categories, this would be slightly disappointing.

Ending Stocks: USDA suggests 2.477 billion bushels will be left over at the end of the marketing year on August 31. That was a 40 million increase over last month. The trade was expecting a slight decline to 2.422. Slightly higher production and a 25 million bushel drop in feed/residual were slightly offset by a 10 million increase for “other industrial”. USDA made no changes in their corn for ethanol numbers or exports. They will have to address those issues in later reports (more corn for ethanol and slightly lower exports).

Implied 2018 Acreage: USDA only issued a winter wheat planting number today. There was no discussion about 2018 planting for corn or soybeans. That won’t be seen until March 29. We will point out that the lack of decline in winter wheat, only 88,000 lower than last year, and likely higher cotton plantings ahead, mean good news for corn and soybean planting ahead. There will be fewer acres for corn and soybeans to fight for in the coming weeks.

Soybeans:

2017 Production: USDA lowered production by 33 million bushels today to 4.392 billion. This came from a 65,000 acre drop for plantings, a 51,000 increase in harvested, and a drop in yields from 49.5 to 49.1.

December 1 Grain Stocks: 3.157 billion bushels of soybeans were counted as of December 1, under the 3.181 trade estimate. Slightly lower than expected stocks, based on a slightly lower production number, means the implied Sep – Nov usage was relatively expected.

Ending Stocks: USDA raised the August 31 ending stock estimate up from 445 million last month to now 470 million bushels. Though we did have smaller production, USDA had to recognize our massive export problem. They did so with a 65 million bushel decline. Allendale expected a minimum of 50 on this report. We are still using a 100 million drop on our internal balance sheets. In all seriousness, USDA’s 65 million cut was a good start but this situation could be a +300 million bushel problem by the end of the year if not improved. There will be further declines in the months ahead. Lastly, USDA’s 10 million increase for domestic crush was a small surprise. We are behind USDA’s hoped-for pace.

Implied 2018 Acreage: There were no 2018/19 numbers for soybeans on this report. That does not stop us from noting that larger than expected winter wheat acreage, and likely more cotton this spring, imply corn and soybeans will be fighting over a smaller acreage pool this spring.

Wheat:

2017 Production: No change for 2017 production was noted. This was as expected.

December 1 Grain Stocks: 1.874 million bushels of wheat was found as of December 1. Quarterly stock numbers are sometimes hard to guess for corn and soybeans on this report as they also include assumptions about changing production. For wheat this number, over the 1.849 trade expectation, simply means lower than expected use from Sep – Nov.

Ending Stocks: USDA’s estimate of end of year stocks, May 31 for wheat, was raised from 960 million to 989. Based on the disappointing usage in the past quarter, food and seed use was lowered. The trade expectation was 956.

Winter Wheat Plantings: If there an area of the report that was a surprise, it was here. 32.608 million acres of wheat was planted this past fall. That was 88,000 under last year. The trade expectation, 31.307, called for a 1.389 million decline. Wheat won’t take the news of larger old crop supply or larger new crop plantings than expected too well.

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