USDA and Drought Update - Monday, 17 July 2017

The July 12th, USDA report sent prices lower with bearish data. 

Corn

  • The expected corn yield was left unchanged at 170.7 bushels per acre
  • Harvested acres were increased from 82.4 to 83.5 million acres
  • Total production was raised along with new ending stocks
  • Ethanol and exports were unchanged
  • Average corn price to producers was lowered by $-.10 for a range of $2.90 to $3.70 per bushel

Soybeans

  • Exports and crush numbers were unchanged
  • Harvested acres were increased slightly
  • Old crop stocks were lowered by -40 million bushels and new crop stocks were also lowered from .495 to .460 billion bushels
  • Average soybean price to producers was raised by $+.10 for an undated range of $8.40 to $10.40 per bushel

U.S Grain Stocks 2016/17

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

Corn

2.370

2.321

2.235 - 2.375

2.295

Soybeans

0.410

0.430

0.400 - 0.465

0.450

U.S Grain Stocks 2017/18

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

Corn

2.325

2.181

1.921 - 2.398

2.110

Soybeans

0.460

0.473

0.374 - 0.513

0.495

Wheat

0.938

0.876

0.757 - 0.957

0.924

World Stocks 2016/17

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

Corn

227.51

225.72

223.80 - 228.00

224.59

Soybeans

94.78

93.12

92.30 - 94.00

93.21

Wheat

258.05

255.35

249.00 - 257.00

256.43

World Stocks 2017/18

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

Corn

200.81

195.33

190.00 - 198.77

194.33

Soybeans

93.53

92.14

90.30 - 93.00

92.22

Wheat

260.60

257.36

250.00 - 262.00

261.19

U.S. New-Crop Production

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

Corn Production

14.255

14.126

13.841 - 14.253

14.065

Corn Yield

170.7

169.6

166.8 - 170.7

170.7

Soybean Production

4.260

4.243

4.164 - 4.260

4.255

Soybean Yield

48.0

47.9

47.0 - 49.0

48.0

U.S. Wheat Production

 

July Est.

Avg. Trade Est.

Trade Range

USDA June

All Wheat

1.760

1.748

1.634 - 1.834

1.824

All Winter

1.279

1.261

1.237 - 1.280

1.250

Hard Red Winter

0.758

0.745

0.693 - 0.775

0.743

Soft Red Winter

0.306

0.303

0.296 - 0.332

0.298

White Winter

0.216

0.210

0.199 - 0.218

0.209

Other Spring

0.423

0.416

0.305 - 0.470

na

Durum

0.057

0.078

0.065 - 0.090

na

 

Japan has become the largest customer of U.S. corn, a position formerly held by Mexico.  Exports to Mexico have fallen by 6.7% or about $1 billion through the end of May while Japan raised their U.S. corn imports by 53% or $1.19 billion, according to a Bloomberg report. The Tortilla Wars, as the NAFTA renegotiations have been named, is bringing U.S. and Mexico trade issues to the surface. Mexican economists blame NAFTA for a loss of nearly 2 million agriculture jobs in their country and also blame the agreement for the rise of illegal immigrants entering the U.S. from Mexico.  Farmers in Mexico are requesting that their country cut dependency for U.S. corn and begin to focus more on raising production within Mexico to fulfill the country’s needs. 

Over the past 23 years, since NAFTA first was implemented, U.S. farmers have seen huge export growth to Mexico.  The amount has grown from 3.1 billion tons in 1994 to 13.9 million tons in 2016.  Mexican government officials have already begun discussions with Argentina and Brazil about entering into a NAFTA type of tax-free agreement but American analysts are not sounding the alarms as of yet.  They do not believe that South American producers have the ability to supply Mexico with all of the yellow corn it needs and they also know that farmers in Mexico do not have the technology or infrastructure to immediately increase production to the level needed.

Drought continues to be a growing concern across the country’s mid-section.  Hot and dry conditions have remained in place in the western portions of the U.S. due to a ridge of high pressure that has settled into that region making already dry conditions across Montana and North and South Dakota even worse.  These states have seen areas of Moderate Drought (D1), Severe Drought (D2) and Extreme Drought (D3) increase in size and severity as temps have averaged 4-10 degrees above normal with some regions of Montana seeing temps in the low triple digits. Northwestern and southern parts of Iowa have also seen conditions deteriorate during the past 3 months, these areas of the state are currently 3 to 6 inches behind on rainfall for the season.  

 

The USDA ‘s Ag In Drought maps and graphs below show that the drought, as of July 11th, was impacting approximately 9% of the nation’s corn crop, 9% of the soybeans, 10% of the winter wheat and 49% of the spring wheat. The graphics below were just released from the USDA, the red lined areas are where drought is present, the green shows where wear most of the corn (in the first map) and soybeans (in the second map) is produced, so the points of the map where the red lines are overlaid on top of green is where yield loss is occurring.

 

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