Outpacing the decline?

Earliest harvested fields a focus for this week's FarmLead.

Grains pushed through the middle of August with attention turning to yields coming off the earliest harvested fields and crop tours in America. Going into the monthly W.A.S.D.E report, most of the market was expecting the U.S.D.A. to update average U.S. yields to 170.6 bu/ac for corn and 47.5 bu/ac beans, but, per their usual style, they made the market take a second look as, they came in at 175.1 bu/ac and 48.9 bu/ac respectively! While those numbers appear bearish on paper, some decent demand figures, especially for soybeans, are keeping prices from dropping.

For the U.S. corn crop, the new record yield suggests a record crop of 15.2 Billion bushels (compared to 14.757 Billion expected), up an incredible 11 per cent from 2015. For the 2016/17 carryout, the bigger crop means a 41 per cent jump from 2015/16 ending stocks to an even-more incredible 2.4 Billion bushels. Global corn production is expected to be 5.3 per cent higher at 1.01 Billion tonnes, and thanks to competition from wheat, 2016/17 ending stocks are expected to be 5.5 per cent higher at 220.8 million tonnes. Brazil’s corn crop in 2015/16 got hit hard with drought, meaning only a 68.5 million tonnes (-20 per cent from 2014/15), however, with record prices down there, acres will be up in 2016/17 with the crop pegged at 80 million tonnes by the U.S.D.A.. Corn output in Argentina in 2016/17 is forecasted at 36.5 million tonnes (+30 per cent year-over-year), while here in Canada, dry weather has been eating up fields in Ontario, meaning only 12 million tonnes of corn should be taken off (-12 per cent year-over-year).

With a record average yield forecasted for beans too, a record crop of 4.06 Billion bushels is being suggested (or 110.5 million tonnes) but strong demand will keep ending stocks from creeping too far, pegged at 330 million bushels. From a global standpoint, Brazil will continue to compete with the U.S., as they’re projected to take off 103 million tonnes of soybeans this year (although we are watching their planting closely) while Argentina will harvest 57 million. Canadian canola production this year was set by the USDA to 17.6 million tonnes, but there are many questions around disease right now. We’re currently expecting something between 16.5 and 17 million tonnes, but the U.S.D.A. is expecting canola exports from the Great White North to drop 8 per cent from last year to 9.4 million tonnes. This is mainly because of China’s state reserve auctions increasing and the looming September 1st deadline of China’s 1 per cent max dockage tolerance on imports.

For wheat, total U.S. production was pegged at 2.32 Billion bushels (+13 per cent), with an average yield of 52.6 bu/ac (+20 per cent or 9 bu/ac from 2015). Globally, wheat output saw big jumps almost everywhere for a record 743.4 million tonne crop, meaning global ending stocks for 2016/17 will jump 4.5 per cent year-over-year to 252.8 million tonnes (that’s a new record too). The E.U. is the only sore spot, with output pegged at 147.5 million tonnes (-8 per cent from last year’s record crop, meaning this year’s is still near the 5-year average). Elsewhere, Argentina is expecting to take off 14.4 million tonnes (+27 per cent from 2015 thanks to no export taxes anymore), Australia with 26.5 million tonnes (+8 per cent), and 30 million tonnes in Canada (+9 per cent). The big surprise is in the Black Sea, up an incredible 10 per cent over last year’s big crop, with 72 million tonnes coming of in Russia (+18 per cent year-over-year, although there are some quality questions), 15 million in Kazakhstan (+9 per cent), and 27 million tonnes in Ukraine (despite much lower acres).

To growth,

Brennan Turner

President and CEO | FarmLead.com

Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and mobile grain marketplace (app available) that has moved almost 300,000 MT in the last 2.5 years. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).

 

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