May 15, 2017

VERY  LITTLE  CHANGE  IN  THE  MAY 10  USDA  REPORT

The USDA World Agricultural Supply and Demand Estimates (WASDE) Report released on May 10 did not offer any significant adjustments to projected 2016-17 U.S. corn and soybean supplies. The Report was regarded as mainly “neutral” for both the corn and soybean markets in the coming months. The May Report showed slightly lower corn ending stocks for 2016-17, and slightly higher 2016-17 soybean ending stocks, compared to the April WASDE Report. Corn ending stocks for 2016-17 are expected to show a 32 percent increase compared to a year earlier, while the ending stocks for soybeans are expected to more than double by the end of the 2016-17 marketing year, compared to 2015-16 ending stock levels for corn and soybeans. The 2016-17 marketing year runs from September 1, 2016 to August 31, 2017. Following are some highlights of the latest USDA WASDE Report :

CORN :

According to the May 10 USDA WASDE Report, the projected corn ending stocks for the 2016-17 year, which ends on August 31, 2017, are estimated at 2.295 billion bushels, which was decreased by 25 million bushels compared to the April Report. The 2016-17 level of corn ending stocks would be at the highest level since the carryover of 1.97 billion bushels for 2005-06. This compares to corn ending stocks of 1.737 billion bushel in 2015-16, 1.731 billion bushels in 2014-15, and 1.232 billion bushels in 2013-14. USDA is projecting that total U.S. corn use for 2016-2017 will be 14.645 billion bushels for livestock feed, ethanol, food products, seed, exports, etc., which is an increase of about one billion bushels from the 2015-16 level. The large level of the corn supply for the 2016-17 marketing year has put downward pressure on corn market prices since early Summer of 2016.

The May WASDE Report offers one of the first USDA estimates for ending stocks in the following year for the crop that is currently being planted. USDA is projecting the corn ending stocks to be 2.110 billion bushels by the end of the 2017-18 marketing year, which ends on August 31, 2018. This would be a decrease of 185 million bushels from the estimated 2016-17 corn ending stocks. USDA is projecting total corn usage at 14.3 billion bushels for 2017-18, which would be a slight decrease from 2016-17 estimated corn usage. USDA is estimating almost steady usage levels for feed and ethanol production in 2017-18, along with a slight decline in U.S. corn export levels. Corn use for ethanol production in 2017-18 is estimated at 5.5 billion bushels.

USDA is estimating total U.S. corn production for 2017 to be at 14.06 billion bushels, which would be a decrease of approximately 7 percent from the record U.S. production of 15.15 billion bushels in 2016. However, the 2017 U.S. corn production would still exceed the 2015 total production of 13.66 billion bushels. The USDA Report indicated an estimated 90 million acres will be planted to corn in the U.S. in 2017, which compares to 94 million acres in 2016, 88 million acres in 2015, and 90.6 million acres in 2014. USDA is estimating an average U.S. corn yield of 170.7 bushels per acre in 2017, compared to a record yield of 174.6 bushels per acre in 2016, 168.4 bushels per acre in 2015, and 171.0 bushels per acre in 2014.

USDA is now estimating the average U.S “on-farm” corn price for the 2017-18 marketing year in a range of $3.00 to $3.80 per bushel, or an average price of $3.40 per bushel, which would be the same as the current projected 2016-17 U.S. average corn price. The current USDA projected corn prices compare to the final national average prices of $3.70 per bushel for 2014-15, $4.46 per bushel for 2013-14, and $6.89 per bushel for 2012-13.

SOYBEANS :

According to the May 10 WASDE Report, the projected soybean ending stocks for 2016-17 are estimated at 435 million bushels, which is a slight decrease of 45 million bushels from the April soybean carryover estimate. The projected 2016-17 soybean ending stocks level compare to carryover levels of 197 million bushels for 2015-16, 191 million bushels for 2015-16, and 92 million bushels for 2013-14. Interestingly, USDA estimated 2015-16 soybean ending stocks at 400 million bushels in the 2016 May WASDE Report, and the actual 2015-16 ending stocks in September of 2016 ended up lower than 200 million bushels. This probably helps offer some explanation for the unexpected strength in the soybean market from harvest season of 2016 until March of 2017.

Based on the recent WASDE Report, soybean ending stocks for 2017-18 are estimated at 480 million bushels, which would be an increase of 45 million bushels above the current estimated 2016-17 ending stocks, and would be at the highest level in over two decades. Total soybean demand for 2017-18 is estimated to be 4.23 billion bushels, which compares to 4.09 billion bushels estimated for 2016-17, and 3.94 billion bushels of total use in 2015-16. The increased demand is mainly due to a projected increase of 100 million bushels for soybean exports in 2017-18, along with a slight increase in the bushels used for soybean processing.

Total U.S. soybean production in 2017 is estimated at 4.25 billion bushels, which would be slightly below the 2016 record U.S. soybean production of 4.31 billion bushels, but would be considerably higher than the 3.9 billion bushels produced in both 2015 and 2014. Planted soybean acres for 2017 are estimated at the record level of 89.5 million acres, compared to 83.4 million acres in 2016, 82.7 million acres in 2015, and 83.3 million acres in 2014. USDA is estimating a national average soybean yield of 48 bushels per acre in 2017, which compares to the record U.S. soybean yield of 52.1 bushels per acre in 2016, and is equal to the previous record yield of 48 bushels per acre in 2015.

USDA is estimating the U.S “on-farm” soybean price for the 2017-18 marketing year in a range from $8.30 to $10.30 per bushel, or an average price of $9.30 per bushel, which compares to the current estimated U.S. average soybean price of $9.55 per bushel for 2016-17, and the final U.S. average soybean prices of $8.95 per bushel for 2015-16, $10.10 per bushel in 2014-15, and $13.00 per bushel for 2013-14.  Given the large estimated U.S. soybean acreage for 2017, any enhancement in the national yield level will likely push total 2017 U.S. production to a record level, and thus put increasing downward pressure on 2017-18 soybean prices.

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Note — For additional information contact Kent Thiesse, Farm Management Analyst and

Vice President, MinnStar Bank, Lake Crystal, MN.  (Phone — (507) 381-7960);

E-mail — kent.thiesse@minnstarbank.com)