U.S. corn, soybean crop just keeps getting bigger

Strong domestic and global demand important in moving large crops.

U.S. corn farmers may set a new record national average yield if the latest U.S. Department of Agriculture's “World Agricultural Supply & Demand Estimates” report figures are realized. With forecasts for a corn yield of 175.3 bu. per acre and record production, average corn prices rose 5 cents/bu., given raised demand forecasts.

“The farm economy continues to struggle, making it imperative that we work to encourage and grow corn markets wherever possible,” said Wesley Spurlock, president of the National Corn Growers Assn. (NCGA) and a farmer from Stratford, Texas. “For much of agriculture, trade presents an important, even critical, opportunity. This is why NCGA will continue efforts to encourage our elected officials to open export markets and improve access through support of the Trans-Pacific Partnership.”

USDA raised its estimate of corn use by the ethanol industry by 25 million bu. from last month, with non-ethanol food, seed and industrial use raised by an additional 60 million bu. over that period. Export use held steady at 2.225 billion bu. If realized, this would be the first time U.S. corn exports have exceeded 2 billion bu. since the 2007-08 crop year, and it would mark the fifth-highest level of corn exports since 1980.

Production estimates were raised 168 million bu. from last month to 15.226 billion bu. USDA raised corn supplies for 2016-17 from last month's estimate to a record 17.013 billion bu. The average price was raised by 5 cents to a median of $3.30/bu.

Carryout estimates were raised again as production increases more than offset increases to usage forecasts. USDA now forecasts total ending stocks at 2.403 billion bu., the highest level seen since the 1980s.

USDA forecasted 2016-17 U.S. soybean production at 4.361 billion bu., up 92 million bu. on higher yields. The soybean yield forecast was increased to a record 52.5 bu. per acre, up 1.1 bu. mainly due to production gains for Minnesota, North Dakota and Kansas.

Despite increased supplies, USDA reduced the soybean crush estimate by 20 million bu. to 1.93 billion, mostly due to reduced soybean meal export prospects.

“Sales are lagging year-earlier levels to several markets, including Mexico, Canada, Thailand and the European Union,” USDA said. “Domestic soybean meal consumption is reduced slightly, in line with changes in the 2015-16 balance sheet.”

Soybean exports are projected to be 2.05 billion bu., up 25 million bu. based on increased supplies. Soybean ending stocks are projected to be 480 million bu., up 85 million bu. from the previous forecast.

USDA increased soybean and product price forecasts for 2016-17 by 15 cents to $8.45-9.95/bu., reflecting reported early-season producer prices. Soybean meal prices are projected to be $305-345 per ton, up $5.00 on both ends. Soybean oil prices are projected to be 32.5-35.5 cents/lb., up 2 cents on both ends.

Bob Burgdorfer, senior editor for Feedstuffs' sister publication Farm Futures, said traders, on average, expected a slight reduction in corn and a slight increase in soybeans.

“For the crops, attention now turns to demand and to South America,” he said.

USDA slightly raised its soybean export estimate but left corn exports unchanged. USDA also left numbers unchanged for Argentina's and Brazil's corn and soybean crops, but Burgdorfer noted that those numbers are up from the previous harvests there.

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