USDA Crop Forecasts

New-Crop Ending Stocks for Corn Rise While Soybean Ending Stocks Fall

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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USDA released its initial outlook for the 2016-17 corn, soybean and wheat crops Friday at the Ag Outlook Forum. Keep in mind these numbers are subject to change through a long growing season. (DTN file photo)

ARLINGTON, Va. (DTN) -- USDA forecasts 2016-17 corn ending stocks at 1.977 billion bushels, up 8% from 2015-16 crop and the highest since 2004-05. The 2016-17 stocks-to-use ratio for corn is projected at 14.4%, up from 13.6% in 2015-16.

Soybean ending stocks for the 2016-17 crop are projected at 440 million bushels, down 10% from 2015-16. The soybean stocks-to-use ratio for 2016-17 is forecast at 11.4%, down slightly from the nine-year highs of the 2015-16 crop.

USDA released its forecasts ahead of the second day of its annual Agricultural Outlook Forum. It's the initial look at the new-crop supply and demand balance sheets.

CORN

Corn production for 2016-17 is projected at 13.825 billion bushels on 90 million planted acres. Production is forecast at 2% higher than 2015-16 as an increase in planted acres offsets a small reduction in expected yield.

"If the estimate holds up, it will mean that another year of good crop weather could give the U.S. a 14 billion bushel corn crop on top of nearly two million bushels of carry coming into the 2016-17 season," said DTN Analyst Todd Hultman.

Total corn use for 2016-17 is projected at 13.725 billion bushels, up 180 million bushels from 2015-16. Feed and residual use, pegged at 5.425 billion bushels, is expected to rise 125 million bushels from the old-crop and account for the biggest share of the gain in use. USDA projects higher numbers of cattle on feed in 2016 and in 2017 as the cattle herd rebuilds. Gains in pork and broiler production also are expected with lower feed prices.

Ethanol is expected to use 5.225 billion bushels of corn from the 2016-17 crop, unchanged from 2015-16.

Corn exports are projected to rebound slightly in 2016-17 to 1.7 billion bushels, up 50 million bushels from the current crop year, but will remain below levels seen in 2013-14 and 2014-15. Corn exports continue to face stiff competition from Brazil where the country's second-crop corn overlaps with the U.S. exports from the 2016-17 shipping season. Argentina also is expected to see more corn production and exports due to policy changes in the country.

Ending corn stocks are pegged at 1.977 billion bushels, the highest since 2004-05. The 2016-17 stocks-to-use ratio is projected at 14.4%, up from 13.6% for the 2015-16 crops.

The average corn price for the 2016-17 crop is projected at $3.45 a bushel, down 15 cents from the projected midrange price for the 2015-16 crop.

SOYBEANS

Soybean production for 2016-17 is set at 3.810 billion bushels, 3% lower than last fall's harvest. Still, overall supplies for 2016-17 are projected at 4.289 billion bushels, up 3% as higher carryover and beginning stocks more than offset lower production prospects.

"With big soybean harvests in South America on the way, USDA's numbers remind us of how heavy supplies could get if U.S. weather is favorable again this year," DTN's Hultman said.

Average yield for 2016-17 is projected at 46.7 bushels per acre, down 1.3 bpa on estimated planted acres of 82.5 million.

Domestic use of soybeans for 2016-17 is forecast at 2.025 billion bushels, up 1% from 2015-16. Higher domestic use is due to projected gains in pork and poultry production.

Soybean exports are expected to reach 1.825 billion bushels for 2016-17, the second-largest export volume on record as lower soybean prices spur more global demand. While the year-to-year increase in shipping to China is expected to slow, other markets should show modest gains.

Ending stocks for the 2016-17 U.S. soybean crop are projected at 440 million bushels, down 10% from 2015-16.

The average farm price for soybeans is forecast at $8.50 a bushel, down 3% from the 2015-16 mid-range price for soybeans.

WHEAT

Total wheat production for 2016 is set at 1.991 billion bushels, down 3% from last year. Wheat planting is pegged at 51 million acres, down 3.6 million acres from 2015. Production is expected to decline for Hard Red Winter wheat, Hard Red Spring wheat and Durum.

"If true, it would also be the largest percentage drop in plantings since a 9% drop in 2010," Hultman said. "This could be mildly supportive to wheat prices, but with the U.S. already bringing a billion bushels of old wheat into the new 2016-17 season, we are still a long ways from describing anything as bullish for wheat."

The decline in wheat production will be more of an offset than larger beginning stocks and a small increase in imports.

The all-wheat yield for 2016 is projected at 45.9 bushels per acre, up 2.3 bpa from the 2015 crop and the highest since 2013.

Domestic wheat use for 2016-17 is forecast at 1.243 billion bushels, an increase of 60 million bushels due to higher feed and residual use pegged at 200 million bushels.

Exports for wheat are forecast at 850 million bushels for 2016-17, up 75 million bushels. Despite the increase, competition from other wheat exporters will continue to limit gains in U.S. market share. World wheat production is projected to drop in 2016-17 after three straight record years. Canada and Argentina are both likely to have higher production, but output in Russia and Ukraine is expected to decline.

Ending wheat stocks for 2016-17 are projected to increase 2% to 989 million bushels. These would be the highest U.S. stocks since 1987-88.

The 2016-17 average price is pegged at $4.20 per bushel, down 80 cents from the mid-range for the 2015-16 crop.

Chris Clayton can be reached at chris.clayton@dtn.com

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(CZ/BAS)

Chris Clayton