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Amid ample supplies and low prices for many U.S. grains and oilseeds, farmers are expected to trim production this year, according to Crop Production and World Agricultural Supply and Demand Estimates reports released by the U.S. Department of Agriculture on May 10.
The first survey-based winter wheat forecast of 1,246 million bus was down 25% from 2016 and the smallest since 1978 based on an average yield of 48.8 bus an acre, down 12% from a record high 55.3 bus an acre in 2016, and harvested area of 25.6 million acres, down 15% from 2016, and the lowest in records back to 1909.
Projections for other crops were based on such non-survey criteria as trend yields and on survey-based planting intentions from March. Corn production was projected at 14,065 million bus, down 7% from the 2016 record of 15,148 million bus and the third highest on record, based on harvested area at 82.4 million acres, down 5%, and an average yield of 170.7 bus an acre, down 2% from the 2016 record-high yield. Soybean outturn was projected at 4,225 million bus, down 2% from last year and the second highest on record, as expected lower yields more than offset record-high harvested area of 88.6 million acres.
The U.S.D.A. wheat, corn and soybean production forecasts all were below the average of trade expectations. The numbers only induced modest reactions in the futures market on May 10, with the three U.S. wheat contracts about flat to up 4c a bu, corn futures up 6c to 7c a bu and soybean futures down 2c to 3c a bu.
Traders must consider a wide array of information at this time of year, without a lot of hard data on which to base decisions. But one trend remains apparent — there is still plenty of wheat, corn and soybeans domestically and globally, even with expected lower production of U.S. crops.
Because of the large crops last year, U.S. 2017-18 beginning stocks (2017 carryover) are up sharply from 2016-17 for wheat (up 19%), corn (up 32% and the highest since 1988-89) and soybeans (up 121%).
For wheat, the sharp decline in production will more than offset lower exports and feed and residual use, resulting in an expected 21% decline in 2017-18 ending stocks, to 914 million bus, the lowest in three years. A late winter storm across much of the western hard red winter wheat region may trim domestic wheat supplies even more. Since the market depends heavily on exports (55% of production in 2017-18), global wheat supplies also must be considered.
The U.S.D.A. projected 2017-18 global wheat production at 737.83 million tonnes, the second highest ever after last year’s record outturn of 753.09 million tonnes, and 2017-18 ending stocks at a record high 258.29 million tonnes.
Corn supplies in 2017-18 are expected to be the second largest on record (after 2016-17), and total use is expected to decrease, but the projected 1,083-millon-bu drop in production should pull ending stocks down 8% to 2,110 million bus, according to the U.S.D.A. Domestic corn use in 2017-18 was forecast to increase slightly as lower feed and residual use is more than offset by higher food, seed and WHEindustrial use (including higher use for ethanol). U.S. corn exports are forecast at 1,875 million bus in 2017-18, down 16% from the current year (which ends Aug. 31) due mostly to sharply higher exports from Brazil and Argentina. Global corn production in 2017-18 was forecast to decline 3%, while ending stocks were forecast to shrink 13% from a record high in 2016-17.
Despite forecast lower U.S. soybean production in 2017 and higher use in 2017-18, ending stocks were forecast at 480 million bus for next year, up 10% from 2016-17 due to the huge jump in beginning stocks. Domestic crush was forecast at 1,950 million bus in 2017-18, up 1%, and exports were forecast at 2,150 million bus, up 5%. The key to the soybean market typically is demand from China and exports from Brazil and Argentina, since the United States exports nearly 50% of annual production. Soybean production in Brazil was forecast at 107 million tonnes next year, down 4% in 2016-17, while Argentina is forecast to hold steady at 57 million tonnes. Lower combined production will limit export gains from South America, the U.S.D.A. said, leaving the door open for increased soybean exports from the United States.
With the exception of cotton, up 12%, and oats, up 3% but still the fifth lowest in history, 2017 production of other crops was forecast sharply lower. Sorghum outturn was forecast at 331 million bus, down 31% from last year and the lowest since 2012. Barley was forecast at 159 million bus, down 20% and the second lowest since 1937, and rice was forecast at 201 million cwts, down 10%.
