USDA Made Big Acreage Changes, But Yearly Stocks Changes Were Small
Market Analysis
The USDA released their economic derived initial sup-ply-demand forecasts for the major U.S. crops at its annual Agricultural Outlook Forum Friday. As has been the case recently, the DC analysts are anticipating large sup-plies of grains & oil seeds continuing into the upcoming 2017/18 crop year when they released their forecasts.
Chief Economist Johansson provided a mild surprise on Thursday when he stated that 2017's 8 major crops plantings may shrink 3.6 million acres (-1.4%) to 249.8 million after last year rise. Low profitability and reduced credit may cut total seedings to their lowest level since 2011. However, the USDA’s forecasts of sizable U.S. supplies continuing into 2017/18 crop year didn’t inspire upward price action despite reduced US seedings.
In corn, the USDA's 90 million plantings was similar to last fall's baseline level & 4 million less than 2016’s seed-ings. The USDA did shaved 0.1 bu from its baseline U.S. yield at 170.7, but they left corn’s outlook at about 14.065 billion. Overall, total supplies are 78 million bu. smaller because of a smaller 2016/17 stocks than last fall. Domestic demand was tweaked with lower feed, but higher food & ethanol for a 55 million rise while exports were cut by 50 million bu. Overall, 2017/18’s ending forecast is 105 million less the current stocks at 2.215 billion.
Despite trade whispers of 5-6.5 million larger US bean plantings because of last fall's 3.75 million lower winter wheat plantings and lower corn planting, the USDA’s 2017 seedings were projected at 88 million acres, just 4.57 million higher than 2016’s level. The USDA did up its yield by 0.1 bu to 48 bu. vs its baseline, but their 2017/18 total supply up just 97 million bu. vs. now. They also upped their overall demand by 97 million (crush & exports) to leave stocks unchanged at 420 million.
USDA projecting spring/durum seedings off 397,000 acres. US supply and stocks smaller but World still large.
(Click on image to enlarge)
What’s Ahead
The USDA’s 2017/18 economic derived balance sheets for corn or soybean weren’t startling different then current US ending stocks, but sizable world supplies left the markets on the defensive. However, the current low prices and recent erratic weather in both North and South America suggest limited downside until the US planting & South America’s late season growing conditions are better known.
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