Last Friday, the USDA updated their Supply & Demand balance sheet. This report updates old crop carryout, and new crop estimates for production and demand. The number most anticipated was the 2016 yield estimates and total production numbers. It is important to remember that this report provides other information which gives the market direction.
Corn: The report provided very little changes to the old crop carryout, up slightly from 1.701 billion bushels, reported in the July S&D report to 1.706 billion bushels in the August report. Ethanol demand was reduced 25 mbu, exports were increased 25 mbu and imports were increased 5 mbu. The new number of 1,706 mbu was very close to the average trade est. of 1,716 mbu.
Corn production estimates for the 2016 crop provided a “huge” surprise. USDA increased their corn yield from 168 bpa (trend line) in the July report to a record yield of 175.1 bpa. Most in the trade expected that the USDA would increase yield to something closer to 171 bpa on more of a wait and see type approach. No changes were made to harvested acres. The increase in yield changed total US production from 14.540 billion bushels reported in July to 15.153 billion bushels in this report.
New crop demand was increased 300 mbu on increased exports and feed demand. The current forecast for 16/17 corn carryout is now 2.409 billion bushels.
Soybeans: Old crop carryout was reduced from 350 mbu in the July report to 255 mbu in the updated report, primarily on increased export demand. The new number of 255 mbu was 65 mbu less than the average trade est. This feels like a manageable number.
Soybean production estimates for the 2016 crop also projects a record yield of 48.9 bpa, nearly 1.5 bushel per acre above the average trade est. of 47.5 bpa. No changes were made to harvested acres. The increase in yield changed total US production from 3.88 billion bushes reported in July to 4.06 billion bushels in this report.
Increased exports and crush resulted in a 45 mbu increase to new crop demand. The current forecast for 16/17 soybean carryout is 330 mbu.
World old and new crop carryout’s for both corn and soybeans also all came in above average trade estimates.
These are the numbers, so now the debate’s begin. Will we really eclipse the previous record corn yield by 4.1 bpa? If we get August and September rains, could we see a 50 bpa soybean yield? Will we see adjustments to harvested acres? Can Nebraska corn yield really be 2 bpa better than last year?
These and many other questions can be debated. The numbers, as presented, tell me that marketing grain will continue to require our full attention, and profitable opportunities will need to be capitalized on. Plans need to be developed and followed. At Central Valley Ag, your ProEdge Grain Specialist and Risk Management Consultants are here to help you. We can share different contracts or “tools” available to implement into your plan. With harvest now just around the corner, we can assist with harvest logistics and contracts available for grain unable to be stored on farm.
As I think about harvest coming on, I know things get real busy. Please be careful, and contact us—we want to help.