USDA
NOVEMBER CROP REPORT AND BEYOND
In 2017, U.S. farmers produced a corn crop near 14,578 million bushels versus 15,148 last year.
The amazing thing that despite a wet spring and dry summer, the U.S. corn yield was a new record 175.4 bushels per acre versus last year’s 174.6. The USDA estimates total U.S. 2017/18 corn demand to be near 14,435 million bushels versus 14,647. This drop is due to lower exports. Corn futures are near season lows and for many farmers below cost of production. Futures are in a carry, which means deferred contracts are higher than nearby. This suggest the market wants farmers to store some of the crop for later.
In 2017, U.S. farmers produced a soybean crop near 4,425 million bushels versus 4,296 last year. This is mainly due to higher acres, as late planted soybeans did not yield as high as early planted due to the dry summer. The USDA estimates total U.S. 2017/18 soybean demand near 4,326 million bushels versus 4,214 last year. Most of the increase is in exports.
Now it is a weather game with the focus on South America. The USDA estimates Brazil and Argentina combined soybean crop to be near 165 million tonnes versus 172 last year. The Brazil and Argentina corn crop is estimated to be near 137 million tonnes versus 139 last year. Their lower crops, if realized, could help U.S. exports later in 2018.
Seasonals suggest there is a tendency for corn and soybean prices to trend higher after the U.S. harvest and put some kind of South American weather risk in prices. Slow U.S. export demand and good South American crops could limit the upside in prices. There is also a tendency for prices to test support in early 2018, if the South American crops are normal. Then there is a tendency for prices to try to trend higher into late spring and early summer until the 2018 U.S. crops are known.
Some analysts feel that over the next 10 years, if U.S. corn and soybean yields continue to grow and world production will continue to increase outside the U.S. that U.S. planted corn and soybean acres may need to drop, despite higher global food demand.
Steve Freed E:
steve.freed@
admis.com T: 001 312 242 7089
18 | ADMISI - The Ghost In The Machine | November/December 2017
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