The much anticipated June USDA WASDE report, released today, was a good news/bad news scenario for many Michigan farmers, according to MFB Field Crops Specialist, Kate Thiel. She said while the overall impact of today’s report was positive for the market, it added insult to injury for many Southern Michigan producers battling mother nature to get a corn crop planted.
“USDA lowered supply projections and increased yield forecasts for corn, while also bumping new crop corn prices by as much as 10-cents per bushel,” Thiel said. “Unfortunately for many Southern Michigan producers, it’s just more salt to the wound, as they are now forced to consider taking the prevented planting option on corn acres or switching those acres to soybeans.”
According to Thiel, today’s USDA report indicated no change to the projected 174-bushels per acre production figure since last month, which if realized, would be the third-highest yield on record. Inventory and export adjustments were significant game changers, however.
Citing a 75-million-bushel increase in 2017/2018 projected exports to 2.3 billion bushels, USDA lowered beginning stocks. According to the National Corn Growers Association (NCGA), this would be the highest export level since 2007/2008.
April exports hit a record high, surpassing November 1989, which was the best prior month to that point. May exports are expected to remain strong given export inspection data.
The report indicates that old-crop outstanding sales at this point in the marketing year also set a record high.
With an increased use of 50 million bushels projected due to higher demand from the ethanol sector, feed and residual use projections were lowered by 25 million bushels from last month reflecting the increased availability of ethanol co-products as well as higher projected prices.
As supply projections fell and yield projections rose, ending stocks projections were adjusted downward by 105 million bushels to 1.57 billion bushels, the lowest level since 2013/2014, according to NCGA.
As a result, USDA is now projecting the 2018/19 season-average corn price received by farmers to be between $3.40 to $4.40 per bushel, a 10-cent increase from the previous month.
Soybeans – global inventories hold prices
The USDA WASDE report on soybeans was much less exciting, Thiel said, with the 2018/19 season-average price forecasts remaining unchanged at $8.75 to $11.25 per bushel; soybean meal and oil prices are projected at $330 to $370 per short ton and 29.5 to 33.5 cents per pound, respectively.
“Even though USDA lowered domestic beginning and ending soybean inventories and increased U.S. exports and crush consumption by 25 million, the report also factored in global production increases,” Thiel said. “
Globally, soybean production is up primarily due to higher production in Brazil following a higher trend yield for 2018/19 and higher yield results for the 2017/18 crop, which increased 2 million tons to 119 million.”
USDA predicts that with higher production, soybean exports for Brazil will increase for both the 2017/18 and 2018/19 marketing years. Ending stocks for Brazil are also increased with higher production and a lower crush estimate for 2016/17.
Wheat – exports offset production increases
While USDA’s WASDE report predicts U.S. 2018/19 wheat supplies to increase slightly this month on higher beginning stocks and production exports were also raised 25 million bushels to 950 million due to tightening Russian inventories and exports.
As a result, projected 2018/19 ending stocks were lowered 12 percent from last year by 9 million bushels to 946 million.
Winter wheat is forecast up 6 million bushels to 1,198 million with modest increases in all winter wheat classes and total wheat production is now at 1,827 million.
The projected season-average farm price is up 10 cents per bushel with the midpoint at $5.10, compared to the revised 2017/18 price of $4.75. As of market close, nearby contract prices were up 19.2 cents.