According to USDA in its November crop report, corn production is forecast at 13.7 billion bushels, up less than one percent from the October forecast, but down 4 percent from last year’s record production. That forecast is 99 million bushels higher with the national average yield raised 1.3 bushels per acre to 169.3 bushels, just 1.7 bushels below last year’s record. Projected domestic corn use for 2015-16 is lowered 50 million bushels as a 25-million-bushel increase in expected feed and residual use, with the larger crop and lower expected prices, is more than offset by a 75-million-bushel reduction in corn used to produce ethanol. The reduced outlook for corn use for ethanol is driven by significant adjustments to the 2015-16 sorghum balance sheet this month.
WHEAT: Projected U.S. exports for 2015-16 are lowered 50 million bushels to 800 million, and ending stocks are raised by an equal amount to 911 million. Exports would be the lowest since 1971-72; ending stocks are the highest since 2009-10. Wheat exports are lowered on a very slow pace to date and continued lack of U.S. price competitiveness. The projected range for the 2015-16 U.S. season-average farm price is narrowed 5 cents on both the high and low ends to $4.80 to $5.20 per bushel. Global wheat supplies for 2015-16 are lowered 0.2 million tons on decreased beginning stocks partially offset by a small production increase.
SORGHUM: U.S. sorghum exports for 2015/16 are projected 105 million bushels lower. Declining premiums for sorghum offered by exporters and large price discounts for sorghum relative to corn in interior cash markets drive expectations for higher use in ethanol production and higher feed and residual use.
SOYBEANS: Soybean production is forecast at a record 3,981 million bushels, up 93.6 million on higher yields. The soybean yield is forecast at 48.3 bushels per acre, up 1.1 bushels mainly on gains for Iowa, Illinois, and Minnesota. Soybean supplies are projected up 2 percent from the October forecast. Soybean crush is raised 10 million bushels to 1,890 million on higher meal exports. Soybean exports are also raised with additional supplies. Ending stocks are raised 40 million bushels to 465 million. If realized, ending stocks would be the highest since 2006-07.
Corn and soybean futures went into the report trading lower, near technical support levels. The bearish numbers in the report pushed prices through those levels. Arlan Suderman, with F.C. Stone, told HAT the market was expecting higher production, but the numbers came in larger than most market expectations, “It is unfortunate that this bearish news comes at a time when the market is already in a bearish frame of mind.”
Suderman said the corn and soybean carryover levels will now keep a lid on prices and make it hard for the market to rally, “We are going to need some kind of weather event to turn these markets, and that is a long way off.” Suderman was surprised at the USDA cut in ethanol exports, but felt other demand projections were in line.
“With the corn harvest nearly complete, we see clearly the incredible abundance American farmers can produce, but we also realize that this excellence does not always bring an equivalent economic reward,” said National Corn Growers Association President Martin Barbre, a farmer from Carmi, IL. “While we have sustainably produced a crop that can feed and fuel our growing world, market forces are negatively impacting the price which we will be paid. It is of the utmost importance that, during times such as these, we rededicate ourselves to NCGA’s ongoing efforts to stimulate demand for our growing crop.”