November 16, 2018

September 2017 USDA Supply & Demand


US Ending Stocks (16/17 in million bushels)
USDA August 17 Avg Estimate USDA Sept 17
Corn 2,370 2,340 2,350
Soybeans 370 370 345
US Ending Stocks (17/18 in million bushels)
Corn 2,273 2,180 2,335
Soybeans 475 442 475
Wheat 933 920 933

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 September report is the second month of the year with two separate surveys for yield determination, a direct farmer survey as well as independent in-field analysis. For the September report, USDA noted the received 10,170 direct farmer surveys and 4,952 field surveys. These two surveys were conducted from August 25 – September 1.

Corn: Today’s report was not the final word on old crop ending stocks. There is still data about the demand through August 31 that has not been released yet. For today’s revision, USDA lowered the old crop stocks from 2.370 billion bushels to 2.350. That was near the 2.358 trade expectation. USDA lowered their corn for ethanol guess by 15 million and the other-industrial numbers by 35. That was more than offset with a 70 million increase for old crop exports. On the new crop side USDA won’t touch acreage until October, when the crop insurance data is co-mingled. The surprise today was the yield increase from 169.5 to 169.9. The trade expectation was 168.2. Production was raised by 31 million bushels. The second surprise was the aggressive cut to demand. The new crop corn for ethanol guess was lowered by 50 million and the other-industrial by 25. That was partially offset with a 25 million increase for feed/residual. Slightly higher yields and a good cut to new crop production raised stocks from last month’s 2.273 billion to 2.335. The trade expectation was 2.170. USDA will issue more realistic production numbers next month.

World Numbers: Old crop ending stocks were lowered from 228.6 million tonnes to 227.0. The new crop estimate was raised though, from 200.9 mt to 202.5. Increases from the US, Argentina, and Mexico were partially offset by declines from the EU, FSU, and Ukraine.

Price Expectations: USDA’s corn price forecast was lowered 10 cents at $3.20. This is a cash corn estimate for Central Illinois that is weighted according to marketing patterns. Current actual new crop bids in that location were $3.27 1/2 (before today’s lower prices).

Soybeans: Old crop stocks were lowered from 370 to 345 million bushels. The trade guess was 365 million. Both old crop crush and exports were raised. New crop stocks were left unchanged at 475 million. The trade guess was 444. Yields were raised from 49.4 in August to now 49.9. That is just a small amount off last year’s 52.1 bpa record. A 50 million bushel production increase was noted. USDA’s new crop export guess was raised by 25 million on this report despite weak new crop bookings.

World Numbers: Old crop stocks were lowered from 97.0 million tonnes to 96.0. Increases were noted for South American exports. On the new crop end, stocks were lowered from 97.8 to now 97.5 mt. No changes were made to major competitor production. Chinese import estimates were raised from 94 to 95 mt.

Price Expectations: USDA’s new crop price estimate for Central Illinois, weighted according to marketing patterns from September 1 – August 31, was lowered by 10 cents to $9.20. Bids yesterday for that location, before today’s lower pricing, were at $9.26 ½.

Wheat: The old crop wheat marketing year ended on May 31. No changes were made to that category. New crop stocks were left unchanged from August at 933 million bushels. The trade guess was 920. No change was made to wheat production this month. USDA will wait until the September 29 Small Grains Summary report. No changes were made to any of the demand numbers.

World Numbers: Interesting to note old crop stocks fell from 258.6 mt to 255.8. Current crop stocks were lowered from 264.7 to 263.1. Much higher Russian wheat estimates were slightly offset with a drop in Australia.

Price Expectations: USDA’s whole marketing year price expectation was lowered by 20 cents to now $4.60. This is an average for the whole June 1, 2017 to May 31, 2018 old crop marketing year. We suggest the August 29 low of $4.22 ½ for December Chicago is the low.

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