Grain prices plunged two weeks ago when the Agriculture Department predicted U.S. farmers would plant 97.3 million acres in corn. If realized, that would be the most corn planted since 1936.
USDA predicted a 1 percent decline in soybean plantings to just over 77 million acres, that would still be the 4th largest crop on record.
The post-report hangover continued for corn and soybeans last week, while wheat prices recovered a bit on news of decreased winter wheat production.
This week, USDA officials reported on what’s left in the bin and how they think it may get used.
The World Agricultural Supply and Demand Estimates report showed ending U.S. stocks for wheat 15 million bushels higher this month because of reduced demand for feed. Despite a predicted increase in seed used for planting the carryout rose to 731 million bushels. Even with slightly more wheat available the stocks-to-use ratio dipped to 30 percent - the smallest in three seasons. Projections for global wheat supplies also were higher primarily due to balance sheet revisions. Overall, private analysts deemed world and domestic wheat supplies adequate.
While the supply of wheat is no longer considered to be burdensome, the winter wheat crop is showing signs of stress. In the 18 states producing the small grain, 64 percent of the crop is in very poor to fair condition – down 2 percentage points over last week’s survey.
USDA revised corn ending stocks upward by 125 million bushels over last month. The increase pushed estimated supply numbers to 757 million bushels. However, the stocks-to-use ratio dropped to 6.8 percent - the lowest level since the 1995-96 crop year. The tighter margin leaves virtually no room for weather or production shortfalls.
According to the report, lower exports and decreased feed use due to high prices are being offset by increased ethanol production. Larger than expected supplies and lower prices - combined with favorable margins for producing and blending the predominately corn-based fuel - are expected to limit a year-over-year decline in ethanol production.
And U.S. corn exports are expected to be off 25 million bushels as foreign competition and overseas sales are predicted to take a bite out of the U.S. market.
U.S. soybean ending stocks are forecast to remain at 125 million bushels. That’s another commodity with a razor-thin margin for error and a 4.1 percent stocks-to-use ratio - its lowest level in a decade.
Globally, the supply was bolstered by a record crop in South America which is expected to help meet China’s growing demand.
The market’s immediate response to the mid-week news was mixed. Corn received a small boost while soybeans and wheat settled slightly lower.