The Weekend Fix
Some things to think about.
U.S. Corn Highlights
The U.S. feed-grain outlook for 2017/18 is for lower production, domestic use, exports and ending stocks. The corn crop is projected at 14.1 billion bushels, down from last year’s record high with a lower forecast area and yield. The yield projection of 170.7 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer weather, estimated using the 1988-2016 time period. The yield model includes a downward stochastic adjustment to account for the asymmetric response of yield to July precipitation. The smaller corn crop is partly offset by the largest projected beginning stocks since 1988/89, leaving total corn supplies down from a year ago but still the second highest on record. Total U.S. corn use in 2017/18 is forecast to decline 2 percent from a year ago as a slight increase in domestic use is more than offset by lower exports. Food, seed, and industrial (FSI) use is projected to rise 80 million bushels to 7.0 billion due to increased use of corn to produce ethanol for fuel and expected growth in non-ethanol FSI. Corn used to produce ethanol is up 50 million bushels, reflecting expectations of gasoline consumption growth, reduced sorghum used to produce ethanol, higher expected blending and continued global ethanol import demand. Projected feed and residual use declines as a smaller crop and increased use of ethanol by-products more than offsets growth in grain consuming animal units. U.S. corn exports are down 350 million bushels, as a 1.0-billion-bushel year-over-year increase in the combined corn exports of Brazil and Argentina during 2016/17 (local marketing years beginning in March 2017 and ending February 2018) is expected to cut into the 2017/18 U.S. shipping season. With total supply falling faster than use, 2017/18 U.S. ending stocks of corn are down 185 million bushels. The season-average farm price is projected at $3.00 to $3.80 per bushel, unchanged at the midpoint from 2016/17.
2017/18 USDA Corn Price Range $3.00 - $3.80
World Corn Highlights
The global coarse grain outlook for 2017/18 is for lower production, increased use and sharply reduced ending stocks. Corn production is forecast down from a year ago, with the largest declines in China and the United States. Partly offsetting are larger crops projected for the EU and Canada. Global corn use is up 9 million tons (1 percent), while global corn imports are projected to increase 7 million tons. Notable increases in corn imports include Vietnam, Egypt, the EU, Saudi Arabia, Mexico and Iran. Global corn ending stocks are down from last year’s record high and if realized would be the lowest since 2013/14. The drop largely reflects forecast declines for China and the United States. For China, total corn supply is down 14 million tons in 2017/18, based on projected declines in beginning stocks and production. Area is reduced based on planting intentions published by the National Bureau of Statistics. On the demand side, feed and residual use is expected to increase based on continued relatively low internal market prices, efforts by the government to promote use of domestic supplies and reduced imports of corn substitutes. Projected FSI use is higher based on expectations of growth in domestic use and exports of corn-based industrial products.
U.S. Soybean Highlights
The 2017/18 outlook for U.S. soybeans is for higher supplies, crush, exports, and ending stocks. The soybean crop is projected at 4,255 million bushels, down 52 million from last year’s record crop with a forecast lower trend yield more than offsetting higher harvested area. With sharply higher beginning stocks, soybean supplies are projected at 4,715 million bushels, up 4 percent from 2016/17. The U.S. soybean crush for 2017/18 is projected at 1,950 million bushels, up 25 million from the revised 2016/17 forecast. Domestic soybean meal disappearance is forecast to increase with expected gains in U.S. meat production. U.S. soybean meal exports are forecast at 12.4 million short tons, leaving the U.S share of global trade slightly lower than in 2016/17. With increased supplies and lower projected prices, U.S. soybean exports are forecast at 2,150 million bushels, up 100 million from the revised 2016/17 projection. Despite sharply higher beginning stocks in South America this fall, a smaller projected harvest in early 2018 leaves 2017/18 total supplies almost unchanged from 2016/17, limiting projected gains for South American soybean exports. With forecast global soybean import growth of 5 percent, the U.S. soybean export share is projected at 39 percent, up slightly from 2016/17 and near the 5-year average. U.S. ending stocks for 2017/18 are projected at 480 million bushels, up 45 million from the revised 2016/17 forecast. The 2017/18 U.S. season-average soybean price range is forecast at $8.30 to $10.30 per bushel compared with $9.55 per bushel in 2016/17. Soybean meal prices are forecast at $295 to $335 per short ton, compared with $320 per ton for 2016/17. Soybean oil prices are forecast at 30.0 to 34.0 cents per pound compared with 31.75 cents for 2016/17.
2017/18 Soybean Price Range $8.30 - $10.30
World Soybean Highlights
The 2017/18 global oilseed supply and demand forecasts include higher production, crush, and exports compared to last year. Global oilseed production is projected at 572.1 million tons, up 6.0 million from 2016/17. Growth in rapeseed, cottonseed, peanut, sunflowerseed, copra, and palm kernel is partly offset by lower soybean production. Soybean production is projected down 3.4 million tons to 344.7 million mainly on declines from last year’s records for the United States, Brazil, and Paraguay as yields return to trend levels. Conversely, soybean production is forecast up for Canada, China, Bolivia, and Ukraine. Rapeseed production is projected to increase 6 percent to 72.8 million with increases for Canada, the EU, Ukraine, and India. Global oilseed crush is forecast to increase 17 million tons to 486.0 million in 2017/18 driven by higher demand for protein meals and oils. Global protein meal consumption is projected to expand 4 percent in 2017/18. China’s soybean meal equivalent consumption is expected to grow at 5 percent, similar to last year but below the prior 5-year average. Global vegetable oil consumption is projected at 189.0 million tons, up 5.4 million led by increases for India and China. Soy oil production gains are expected for China and palm oil production gains for Indonesia and Malaysia. Global soybean exports are projected at 149.6 million tons, up 5.0 million from 2016/17. Imports are expected to grow for China, Egypt, Vietnam, and the EU. Lower global production has led to a 1.3-millionton decrease in soybean stocks, particularly in Brazil and Argentina where stocks are expected to decline by 2.6 million tons combined. Partially offsetting are higher stocks in the United States and Canada.
By Chris Benson
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