October 21, 2018

August 2017 USDA Supply & Demand


US Ending Stocks (16/17 in million bushels)
USDA July 17 Avg Estimate USDA August 17
Corn 2,370 2,386 2,370
Soybeans 410 401 370
US Ending Stocks (17/18 in million bushels)
Corn 2,325 2,003 2,273
Soybeans 460 424 475
Wheat 938 907 933

Each month USDA updates various estimates of supply and demand and revises its moving target for where stocks will end at the end of the marketing year, August 31 for corn and soybeans and May 31 for wheat. The August one is the first survey based method for yield determination. USDA uses two separate surveys for this report, a direct farmer survey as well as independent in-field analysis. The in-field analysis is limited at this time based on maturity of the crop. Southern regions in the US will quality for both population counts and ear weights. Most of the Midwest will only qualify for population counts.

Corn: Old crop ending stocks were left unchanged from the previous month’s 2.370 billion bushel guess. No changes were made to any of the currently-in-play old crop demand numbers. No change was made to new crop planted or harvested acreage estimates. USDA’s Farm Service Agency will release the first crop insurance based acreage numbers this afternoon at 2 pm. That will hold the first look at preventive plant. Though the planting numbers on the August FSA release will change quite a bit the preventive plant numbers in August will be very complete, about 95% of the final number shown in January. USDA will incorporate crop insurance in the official supply estimates on the October supply/demand report. New crop yields were lowered from 170.7 bpa to 169.5. USDA’s ear population estimate would be the fifth largest in history. We have no problem with that estimate. For this report, they assume some type of projected ear weight. Interestingly, whatever ear weight estimate they used was the third largest in history, only behind 2016 and 2014. Bottom line here, the ear weight measurement obviously has a bit to fall when they do next month’s survey in a short period of time. With only a minimal drop in yields, their 14.153 billion production estimate was only 102 million off last month’s estimate. That helped lower ending stocks from 2.325 billion last month to now 2.273. The trade expectation was 2.003. USDA will issue more realistic production numbers next month.

World Numbers: Old crop ending stocks were raised from 227.5 to 228.6. New crop stocks were raised from 200.8 million tonnes to 200.9. No changes were made to their previously released Brazil or Argentina numbers.

Price Expectations: USDA’s old crop corn price forecast was left unchanged from last month at $3.35 for their reference Central Illinois location. New crop cash corn prices were pegged at $3.30. This is their cash corn price expectation for the whole September 1 – August 31 period adjusted by marketing patterns (heavier emphasis on Sep – Jan sales). Current actual new crop bids in that location were $3.44 (before today’s lower prices).

Soybeans: Old crop stocks were lowered from 410 to 370 million bushels. Though they lowered 10 million from domestic crush they offset that with a 50 million increase for exports reflecting the current strong pace. Those changes were needed. For new crop, no changes were made to their planted or harvested acreage estimate. On the yield end, USDA surprised the trade with an increase from USDA’s version of trend, at 48.0, up to now 49.4. That pushed production up from 4.260 billion to now 4.381. This would be a new all time record for soybean production. Last year had higher yields at 52.1 but this year has larger acreage and the second largest yield of all time. Higher supply but lower beginning stocks helped push ending stocks up from 460 million last month to 475. The trade was expecting 424. Though we expect this yield number to be lowered on future reports, we don’t expect any large decline.

World Numbers: Old crop stocks were raised from 94.8 million tonnes to now 97.0. USDA lowered Argentina domestic crush and exports and slightly lowered Brazilian exports. New crop world stocks were raised from 93.5 to now 97.8 mt. This was mainly an old crop issue. No real changes were made for Argentina, Brazil, or China.

Price Expectations: USDA’s price estimate for Central Illinois, weighted according to marketing patterns from September 1 – August 31, was left unchanged at $9.50 for old crop. New crop was lowered from $9.40 to now $9.30. Bids yesterday for that location, before today’s lower pricing, were at $9.40 ½.

Wheat: Old crop stocks were left unchanged at 1.184 billion. The old crop year numbers are settled for now. New crop acreage was not changed from the previous estimate. Yields were lowered from 46.2 to 45.6 bpa. Production fell from 1.760 billion to 1.739. Winter wheat production was raised by 8 million bushels. Durum was lowered by 7 million. Other spring production was lowered from last month’s 423 million estimate to now 402. That is a bit under last year’s 534 million that came from both higher acres and a strong yield. Lower production helped push new crop stocks down from 938 million last month to 933.

World Numbers: Current crop stocks were raised up from 260.3 to now 264.7 million tonnes. Lower production was noted for Canada (28.4 to 26.5 mt) and Brazil (5.6 to 5.2 mt). Former Soviet Union 12 countries were raised from 125.2 to 133.8 mt.

Price Expectations: No change was made to USDA’s price expectation at $4.80. This is an average for the whole June 1, 2017 to May 31, 2018 old crop marketing year.

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