- The morning was weaker in Chicago as the USDA Outlook Forum’s acreage data triggered selling in corn and soybean futures. The USDA has estimated total major cropped area (corn, wheat, soybeans and cotton) at 235.5 million acres. This is down 2.2 million from 2016/17, but up 1 million from the USDA’s baseline estimates released in late 2016. Corn acreage is pegged at 90 million, unchanged from the baseline; soybean area is pegged at 88 million, up 2.5 million from the baseline and record large; wheat area is estimated at 46 million acres, down 2.5 million from the baseline and accounts for NASS’s winter wheat seedings data; and cotton acreage is expanded to rebound to 11.5 million, vs. 10.5 million in the baseline report. The soybean figure, especially, is viewed as bearish and assuming trend yield, the 2017/18 soybean crop could reach a record large 4,150-4,175 million bu.
- This compares to total consumption in the 2016/17 crop year of 4,080 million bu, and so end stocks could build another 80-100 million bu to 500-520 million in 2017/18 with normal world weather. The USDA has also projected the season average cash price in corn at $3.50, vs. 3.40 in 2016/17. Wheat’s average price is pegged at $4.30, vs. $3.85 currently, with the average soybean cash price forecast at $9.60, vs. $9.50 in 2016/17. Outlook Forum data so far has not been surprising, but does highlight that adverse weather is needed to adequately draw down US and world stocks.
- A host of government and private analysts continue to increase S American crop sizes. The Argentine Ag Ministry now estimates corn production at 40 million mt, vs. the USDA’s 36.5. Safras in Brazil projects total Brazilian corn production at a massive 95 million mt, vs. the USDA’s 88. Agroconsult in Brazil has raised the soybean crop there to 107.8 million mt, vs. 105.3 million mt in early February. It is still a bit premature to raise yields too far above trend, but no doubt weather has been conducive to bumper harvests, and the weather forecasts lack any major threat into the middle part of March, and harvest progress remains ahead of last year.
- The USDA’s data today is slightly bearish, but more important in the near term is favourable S American weather and rising production estimates. With the S American forecast maintaining near normal precipitation in Brazil through to around March 10th, the Brazilian soybean crop is nearly made. Only persistent flooding rain Argentina in late March/April can materially affect S American crop sizes.