USDA sees corn ending stocks for the 2015/16 season declining 8% from the 2014/15 high to 1.687 billion bushels. Soybean ending stocks are projected to climb to 430 million bushels, up 12% year over year.
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 sheet. USDA revealed its acreage estimates on Thursday, pegging corn acres at 89 million and soybeans at 83.5 million.
CORN
USDA forecast corn production at 13.595 billion bushels in 2015, down 4%. However, if realized, it would be the third largest crop in history. The national average yield, at 166.8 bushels per acre, is 4.2 bpa lower than 2014’s record. USDA’s yield estimates are projections based on a model that accounts for planting progress and summer precipitation and temperatures.
Corn use, at 13.76 bb, is slightly higher than 2014/15 as increases in exports and feed and residual use are expected to more than offset a reduction in use for ethanol. Feed and residual use was estimated at 5.275 bb, 25 mb higher than the 2014/15 estimate. USDA sees lower feeding rates of other feed grains, especially sorghum, as well as expansion in the livestock sector that will increase demand. Corn use for ethanol came in at 5.225 bb, down 25 mb year over year. USDA said that while gasoline consumption increased in the current marketing year, EIA projects a reduction in 2015/16 gasoline consumption. Exports are projected to increase 100 mb to 1.850 bb. World corn production is expected to decline in 2015, but global demand is expected to grow.
The ending stocks forecast, at 1.687 bb, is down 8%. Larger beginning stocks for the 2015/16 year are more than offset by lower production and higher use. The stocks-to-use ratio comes in at 12.3%. USDA pegged the season average farm price at $3.50.
DTN Senior Analyst Darin Newsom said it’s possible there could be a small reduction in corn acres, and “if history is any guide, national average yield should come in below trendline, meaning production could be smaller than expected.” Beginning stocks could also be reduced to possible increases in demand.
Newsom also disagrees with USDA’s cut to corn use for ethanol, and thinks it will be even with 2014/15. “That would make total U.S. demand slightly larger than projected. The bottom line: these numbers are neutral for corn, in line with what we’ve already talked about in futures spreads.”
SOYBEANS
USDA forecast 2015 soybean production at 3.8 billion bushels, 4% lower than last year due to lower yields. The national average yield is forecast at 46 bpa, down 1.8 bpa from last year.
Domestic soybean use is forecast to increase 2% year over year to 1.955 bb, with crush expanding 45 mb to 1.84 bb. Exports are expected to be 1.82 bb in 2015/16, which USDA said “is a modest increase over 2014/15 considering rising supplies and lower prices.” Limited growth in global trade and South American production will add to the competitive export environment.
USDA’s initial soybean ending stocks estimate is 430 mb, the highest since 2006/7 and up 12% from last year. The ending stocks-to-use ratio, at 11.2%, is a nine-year high. The season average farm price is estimated at $9 per bushel.
“The increase to 430 mb is out of line with what the market is showing in the spreads,” Newsom said. “Beginning stocks likely won’t be 385 mb when all is said and done… While USDA is bearish beans, the market is bullish. We’ll see who wins in the end.”
WHEAT
Wheat production is expected to increase 5% to 2.125 bb despite lower planted acreage. USDA sees a higher all-wheat national average yield 45.2 bpa. USDA noted that while drought remains a concern in the Southern Plains, “an improved weather situation is expected to lead to a more normal harvested-to-planted ratio.”
Domestic wheat use is expected to increase 45 mb. Feed and residual use forecasts increased 40 mb to 190 mb. USDA said it’s higher, in part, due to a 191 mb increase in supplies. “Wheat feeding typically occurs during the summer quarter,” USDA said. “The 2015 June-August quarter wheat-to-corn price relationship is expected to be more favorable for wheat feeding than last summer.”
Exports are also projected to rise by 75 mb to 975 mb.
U.S. ending stocks for 2015/16 are projected to increase 10% from a year earlier to 763 mb, the highest ending stocks figure since 2010/11. The stocks-to-use ratio is forecast at 34.6% with a season average farm price of $5.10 per bushel.
“Ending stocks are going up, meaning more bearishness for wheat,” Newsom said, adding that the yield estimate seems possible. “Demand seems reasonable, though 475 mb of exports could be tough if the U.S. dollar index doesn’t back off. The bottom line: It looks to be another year of more of the same for wheat.”
