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WASDE: Ending Corn Stocks Lowest in Recent Years

The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report on Thursday. Extremely hot and dry weather across Europe and the former Soviet Union have lead grain prices on a rally and global supply to decrease. Estimates of U.S. corn yields were increased to a record 165.0 bushels per acre, but domestic supplies were lowered to a four-year low of 1.3 billion bushels.

U.S. corn ending stocks were decreased by 61 million bushels to 1.312 billion bushels, which would be the lowest since 2006/07. The decrease in ending stocks was due to an increase in domestic use of 30 million bushels, primarily from an increased use in sweeteners, as well as an increase in exports. U.S. exports were estimated 100 million bushels higher on tighter world supplies of wheat and coarse grains. U.S. corn yields were increased by 1.5 bushels per acre to 165 bushels per acre, which would be 0.3 bushels higher than last year’s record crop, but the increase did not entirely offset the increased exports and domestic use. The USDA season-average farm price for corn is estimated at $3.50 to $4.10 per bushel, an increase of 5 cents on both ends.

Projected world corn supplies were decreased by 0.8 million tons due to a 1.5 million ton decrease in both Russia and Ukraine which more than offset the increase in U.S. production.

The USDA did not changed their July estimate of Soybean ending stocks of 360 million bushels due to an offset lead by increased exports and increased production. U.S. soybean production was estimated 88 million bushels higher than last month’s estimate, up to 3.4 billion bushels due to an increase in yields to last year’s record high, 44 bushels per acre. Exports were increased by 65 million bushels to 1.435 billion on an increase in buying from China, and lower ending stocks in South America making U.S. soybeans a more attractive buy. The USDA season-average farm price for soybeans is estimated at $8.50 to $10.00, up 40 cents from last month.

Global soybean production was estimated at 253.7 million tons, up 2.4 million tons, due to increased production in the U.S.

An increase in U.S. wheat production was not enough to offset the increase in U.S. wheat exports, leaving the ending stocks 141 million bushels lower than last month’s estimate, and 21 million bushels lower than in 2009/10. U.S. production was increased by 49 million bushels due to an increase in yields across the Northern Plains and Pacific Northwest. U.S. exports in wheat were increased by 200 million bushels due to an extreme decrease in production from the EU-27 and FSU-12. The USDA season-average farm price for wheat is estimated at $4.70 to $5.50, up 50 cents from last month’s WASDE.

World wheat supplies estimates decreased by 15.3 million tons on lower global production despite the increase in U.S. production. Russia’s wheat production estimate was reduced by 8 million tons alone.

The USDA increased U.S. corn yields, but the key ratio of ending stocks to usage declined due to higher use. Production needs to outpace usage in order to alleviate the strained supply and demand curve, but that scenario is high unlikely. Historically, usage is increasing faster than corn production. Global wheat supplies are dwindling, while the U.S. wheat supply is estimated to be back below record amounts due to the increase in exports.

Read more about farmland and agriculture at: Farmland Forecast

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