USDA Sees Lower Production

By Chris Clayton
DTN Ag Policy Editor

ARLINGTON, Va. (DTN) — In its early forecast for crop production, USDA’s Outlook for crops lowers corn, soybean and wheat production for the 2017-18 crop year.

USDA pegs corn production at 14.065 billion bushels, 7% below a year ago with an average yield of 170.7 bushels per acre, down from last year’s record yield of 174.6 bpa. USDA projects corn acreage at 90 million planted acres, down 4 million from 2016.

Despite USDA boosting soybean planted acres for this spring by 4.6 million acres to a record 88 million acres, USDA still lowers projected soybean production to 4.18 billion bushels, 3% lower than 2016 with an average yield of 48 bpa, down 4.1 bushels from 2016.

Wheat production is projected at 1.837 billion bushels, down 20% from last year with a yield expected at 47.1 bpa, down 10% from last year. Planted wheat acres are projected at 46 million, down 4.6 million from last year.

The USDA Outlook is the department’s first major forecast of the 2017-18 marketing year, which will be updated in the March 31 prospective plantings report.

"USDA’s corn and soybean estimates are neutral with ending stocks staying close to this season’s estimated amounts," said DTN Analyst Todd Hultman. "Because early trendline yields are below those we saw in 2016, there is room for more bearish supply increases, should we get a fifth consecutive year of good growing weather."

Hultman said USDA’s estimate for wheat is slightly less bearish than the current season, but also has room to show a higher yield if weather cooperates once again.

"As said before, these estimates are early starting points in a conversation that has a long way to go," he said.

CORN

With estimated production at 14.065 billion bushels, supplies for the 2017-18 crop year will decline from the 2016-17 record high, but still remain relatively large.

Beginning stocks from the old crop are forecast at 2.32 billion bushels. Total corn use for the 2017-18 crop is projected at 14.22 billion bushels with a total supply of 16.435 billion bushels, which includes 50 million bushels of imports.

Feed and residual use for the new crop is pegged at 5.45 billion bushels, down 150 million bushels from 2016-17 while ethanol use is increased to 5.4 billion bushels, up 50 million bushels from the old crop.

USDA lowered corn exports for the 2017-18 marketing year to 1.9 billion bushels, down from 2.225 billion bushels for the 2016-17 crop. The rationale for lower exports is increased global competition due to abundant supplies in Argentina, Brazil and Ukraine. Beyond strong production in South America, USDA noted Ukraine has increased its exports to Asia and is taking some market share from the U.S.

Ending stocks are projected for the new crop at 2.215 billion bushels with a stocks-to-use ratio of 15.6%, slightly better than the 2016-17 crop.

The 170.7 bpa is based on weather-adjusted trends assuming a normal growing season weather.

USDA pegs the season average price for corn at $3.50 a bushel, up 10 cents from the 2016-17 crop.

SOYBEANS

With a carryover of 420 million bushels, USDA projects production at 4.18 billion bushels, imports at 25 million bushels and at total supply of 4.625 billion bushels.

Due to a projected yield decline to 48.1 bushels per acre, USDA pegs total supplies at 4.625 billion bushels, still 97 million bushels higher than total supply for 2016-17 due to the higher beginning stocks.

Total domestic soybean use is projected to slightly increase to 2.08 billion bushels. USDA cites the higher pork and poultry production as driving slightly higher domestic use for the crop.

USDA bumps up exports to 2.125 billion bushels for the 2017-18 crop, a 75-million bushel increase from 2016-17. Strong global demand will lift exports for all major production areas, driven mainly by China, which drives two-thirds of global soybean trade. Further demand in Asia, the Middle East and Africa also will provide support for an increase in global soybean exports.

Ending stocks for the 2017-18 crop are also projected at 420 million bushels, the same carryover number used for the old-crop stocks, putting the stocks-to-use ratio at 10%

USDA projects the season average price for soybeans at $9.60 per bushel, up 10 cents from the 2016-17 crop.

WHEAT

Wheat production is projected to decline to 1.837 billion bushels, a decline of 473 million bushels from the 2016-17 crop as planted acreage declines by 4.2 million acres and yield declines to 47.1 bpa.

With a carryover of 1.139 billion bushels and imports of 120 million bushels, USDA projects the total wheat supply at 3.096 billion bushels for 2017-18.

Total domestic use for wheat is projected at 1.216 billion bushels, down 30 million bushels from the 2016-17 crop.

Wheat exports for the 2017-18 crop year are projected at 975 million bushels down 50 million bushels from the old crop.

That puts total use at 2.191 billion bushels, down 80 million bushels form the old-crop usage.

Ending stocks for the 2017-18 crop are projected at 905 million bushels, down 234 million bushels from 2016-17.

USDA projects the average season price for wheat will be $4.30 a bushel, up 45 cents from the 2016-17 crop.

COTTON

USDA projects a small increase in cotton production in the U.S. in 2017 with production pegged at 17 million bales, up .2% from the 2016 crop. Planted acres will increase to 11.5 million acres, up 1.5 million acres from 2016.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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