The USDA released its monthly Crop Production and WASDE reports today. The Crop Production report featured updated estimates on winter and spring wheat yields and production. Projected U.S. wheat supplies for 2015/2016 were raised 58 million bushels this month on larger beginning stocks and production. Overall yields for spring wheat are forecast above average and those increases should offset decreases in Hard Red Winter, Soft Red Winter and White wheat. Feed and residual use for all wheat in 2015/2016 is raised 5 million bushels to 200 million on the larger crop. All wheat exports for 2015/2016 are raised 25 million bushels to 950 million on increased U.S. supplies and reduced wheat production in Canada. These exports would be up 11 percent from the low level of 2014/2015, but still well below the 5-year average. Ending stocks are raised 28 million bushels to 842 million. If realized, those levels would be the largest since the 2010/2011.
For the global supply and demand estimates, USDA increased their projections for global wheat supplies for 2015/2016 by 12.1 million tons primarily on increased beginning stocks in China due to reductions in wheat feeding. Wheat feeding in China fell substantially starting with the 2013/2014 market year as wheat prices became uncompetitive with corn. Total world production for 2015/16 is raised to 722.0 million tons; down from last year’s record but still the second largest. Global ending stocks for 2015/2016 are raised 17.4 million tons to a record 219.8 million tons, mostly reflecting the 17.2-million-ton increase in China. Expressed as days of use, this would be the highest stock level since 2009/2010. US wheat prices for 2015/2016 were projected at $5.25 per bushel, down 79 cents from the previous year’s estimate but up 35 cents from last month’s forecast.
Estimates for corn and soybean yields won’t be released until August. Given no new survey results, USDA made no adjustments to their yield projections for those crops. Many in the trade had anticipated a downward adjustment due to wet weather over much of the Midwest this past month. The new numbers did reflect the new acreage and grain stocks estimates which came out on June 30 which suggested lower current supplies and carryouts for both corn and soybeans. Looking forward to the 2015/16 crops, the net effect points to a somewhat tighter balance sheet for corn and soybeans. Corn ending stocks for 2015/2016 are estimated at 1.599 billion bushels, down 170 million bushels from last month’s forecast. The season average corn price is projected at $3.75/bushel, up 15 cents from last month’s projection, up about 5 cents from this year’s estimated average price. Soybean ending stocks for 2015/2016 are projected at 425 million bushels, down 50 million from last month’s projection. The season average price for soybeans is now projected at $9.25 per bushel, up 25 cents from last month’s projected level, but about 80 cents below the current marketing year estimate.
In early trading following release of the report, wheat futures were down slightly while both soybean and corn futures were trading about 5 cents above yesterday’s close. We have seen a rally in grains and oilseed prices over the past month over concern with the size of the US corn and soybean crops. July is typically a critical month for corn development. USDA’s August Crop Production report will present the first survey-based estimates for corn and soybean yields as well as resurvey of planted soybean acreage in those states most affected by spring rains.
Joseph Glauber is a Senior Research Fellow at the International Food Policy Research Institute (IFPRI) in Washington, DC. Prior to joining IFPRI, Glauber served as Chief Economist for the U.S. Department of Agriculture, where he was responsible for the Department’s agricultural forecasts and projections, oversaw climate, energy and regulatory issues, and served as Chairman of the Board of Directors of the Federal Crop Insurance Corporation.
Files:
