Increases to U.S. corn export forecasts led to higher price forecasts in the Department of Agriculture reports. With a 50-million-bushel increase to the export sector, corn price forecasts for the 2016/2017 crop year increased 15 cents to $3.50 per bushel.
“NCGA is pleased that demand from the export sector continues to grow and, thus, prices are rising slightly. At the same time, we know that this trend must continue at an accelerated pace.” said National Corn Growers Association President Chip Bowling, a farmer from Maryland. “Farmers need the EPA to step up and comply with its statutory obligations under the Renewable Fuel Standard. We need Congress to help us push export demand even further by opening new markets by passing the Trans-Pacific Partnership and lifting the Cuban Trade Embargo. As this month’s report demonstrates, even small increases to demand can have an impact on prices. Working together, we can make each small impact add up to a real, necessary boost for farm families.”
This report projected increased exports in light of improved relative competitiveness with other exporting nations. Notably, this report also marked the first time that U.S. corn export commitments surpassed the levels seen at that period the year prior. This led to a decrease in the ending stocks forecast, which now sits at roughly two billion bushels.
The 2016/17 season-average corn price received by farmers rose and is now projected to be between $3.20 to $3.80 per bushel.
Forecasts have not changed and continue to indicate a record crop with overall production reaching 14.4 billion bushels if achieved.
Demand strikes again
Three big soybean market movers were highlighted in the WASDE report. The government lowered beginning and ending stocks, increased export projections and bumped up domestic crush.
Soybean beginning stocks for the 2016/17 marketing year are pegged at 370 million bushels this month, down 30 million from May. Ending stocks are projected at 260 million bushels, down 45 million from last month. Exports for the 2015/16 marketing year are estimated at 1.76 million bushels, up 20 million from May. Soybean crush for the current marketing year, ending in August, was raised 10 million bushels to 1.89 billion bushels.
Iowa Soybean Association (ISA) experts and industry analysts say the report was extremely bullish on beans.
“We have seen unusually high export demand recently that’s reflected in this report,” said Grant Kimberley, ISA director of market development. “We expect demand to keep chugging along. With weather concerns in South America, the U.S. could soon be the only soybean store in town, and our shelves are full for now.
“At this rate we may see even lower ending stocks before the marketing year is over,” Kimberley continued. “The biggest factor now is watching U.S. weather this summer.”
According to the report, Brazil’s soybean crop is 2 million tons less than earlier projections at 97 million tons. Hot, dry conditions in the center-west and northeast parts of the country reduced yields. Extreme wet weather and flooding curtailed soybean production and exports in Argentina.
An increase in U.S. soybean and soybean meal exports are primarily fueling the recent week-after-week price rally not seen since the mid-1970s, analysts say. November soybeans on the Chicago Board of Trade increased 10 cents after the report was released, trading at more than $11.60 per bushel. New-crop beans have jumped about $2.50 since early March.
Oilseed expert John Baize of Falls Church, Virginia said the report is clearly bullish, noting soybean use is higher than expected as the current marketing year winds down.
“This was a greater stocks reduction than the average trade estimates,” Baize said.
Another positive, Baize said, is the government raised export projects for the current marketing year and the next as well based on early-season export projections. Exports are projected 15 million bushels higher for 2016/17 at 1.9 billion bushels.
“That’s very positive,” Baize said. However, he cautions “a downward price correction could occur as many industry experts believe prices have risen too high.”
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