UPDATE 2 – Winter wheat rallies on USDA’s low acreage estimate

Reading Time: 3 minutes

Published: January 12, 2016

WASHINGTON, Jan. 12 (Reuters) – U.S. corn and soybean supplies ballooned to record levels as of Dec. 1 following bountiful harvests of both crops and reduced usage, according to government data released on Tuesday.

But grain stocks lagged market forecasts, corn and soybean production was smaller than previously estimated, and U.S. winter wheat area was smaller than expected, the U.S. Department of Agriculture said.

“The thought was that big crops get bigger and they actually reduced the production for (U.S.) beans and corn and pulled back the yields as well,” said Dax Wedemeyer, analyst with U.S. Commodities.

Read Also

(Wirestock/iStock/Getty Images)

China soybean imports hit record June high on strong Brazil shipments

China’s soybean imports hit the highest level ever for the month of June, a Reuters calculation of customs data showed on Monday, driven by a surge in shipments from top supplier Brazil.

Chicago Board of Trade soybean futures, which were trading lower before the report was released, surged to their highest since Dec. 7. Corn and wheat futures also rebounded with Kansas wheat up more than four percent at one point.

Canola futures rose too, but the gains at less than one percent were muted, even as the loonie fell below US70 cents.

USDA said global oilseed year end stocks would be 90.91 million tonnes, down from the December forecast of 95.14 million.

However, global vegetable oil year end stocks rose to 16.67 million tonnes, up from 16.14 forecast in December.

Momentum to the U.S. futures rally was supported by the fact that big funds were heavily short and so a mildly bullish report triggered short covering.

Wheat generated strength from the USDA’s estimate that winter wheat seedings fell a bigger-than-expected 7.2 percent to 36.609 million acres, a six-year low.

“We might have a better longer-term wheat price situation than we thought,” said Rich Nelson, analyst with Allendale Inc.

U.S. corn stocks as of Dec. 1, 2015 stood at 11.212 billion bushels, slightly above the 11.211 billion a year ago and the biggest ever on that date in any year. But the number was a little less than the midpoint of analysts’ expectations.

Soybean stocks rose to 2.715 billion bu. from 2.528 billion a year earlier, beating the previous record of 2.701 billion set in December 2006. The number was in line with analysts’ expectations

The Dec. 1 wheat stocks figure of 1.738 billion bu. was a five-year high that exceeded market expectations by 40 million bu.

USDA cut its estimate of the U.S. corn harvest for the 2015-16 marketing year to 13.601 billion bu. from 13.654 billion, lowering the average yield per acre to 168.4 bu. from 169.3 bu. Soybean production was lowered 51 million bu. to 3.930 billion, with the average yield reduced to 48.0 bu. per acre from 48.3 bu.

Domestic corn ending stocks for 2015-16 were surprisingly raised to 1.802 billion bu. from 1.785 billion bu. despite the smaller harvest view, largely due to a 50 million bushel cut to exports.

U.S. soybean ending stocks were lowered 25 million bu. to 440 million bu. The average of analysts’ estimates for soybean stocks was 468 million bu.

USDA also cut its forecast for U.S. soy exports to 1.690 billion bu. from 1.715 billion.

U.S. wheat ending stocks were raised 30 million bu. to 941 million, more than analysts had expected, due to a reduction in feed and residual usage.

USDA lower its global year end stocks forecast for corn and soybeans but raised it for wheat. It slightly increased its wheat production forecast for European Union and former Soviet Union and trimmed the outlook for global wheat feed consumption.

U.S. winter  wheat seeded area, in million acres

Million acres USDA Today Analysts’ expectation Last year
All winter 36.609 39.320 39.461
Hard red 26.5 28.810 28.978
Soft red 6.72 7.144 7.087
White 3.43 3.366 3.396

 

 

US 2015-16 ending stocks in billion bushels

  USDA Today Analysts’ expectations Dec USDA report
Wheat 0.941 0.919 0.911
Corn 1.802 1.785 1.785
Soybeans 0.440 0.468 0.465

 

 

Global 2015-16 ending stocks in million tonnes

Million tonnes USDA Today Analysts’ expectation Dec USDA report
Wheat 232.04 229.60 229.86
Corn 208.94 212.51 211.85
Soybeans 79.28 82.57 82.58

 

 

US 2015-16 Dec. 1 quarterly stocks in billion bushels

  USDA Today Analysts’ expectation Dec 2014
Wheat 1.738 1.698 1.530
Corn 11.212 11.237 11.211
Soybeans 2.715 2.720 2.528

 

 

 

About the author

D'Arce McMillan

Markets editor, Saskatoon newsroom

Markets at a glance

explore

Stories from our other publications