The USDA's estimate for the 2014/15 average corn yield decreased 2.4 bushels per acre from last month, resulting in a 121 million bushel decrease in ending stocks. Although this is a significant drop in production, 2014/15 remains the largest corn crop on record. Soybean production increased with a 0.3 bushel per acre increase in average yield. However, soybean ending stocks remained unchanged as export demand for soybeans continues to set records in the beginning of the new marketing year.
Corn
US corn production for 2014/2015 was estimated at 14.216 billion bushels, a 191 million bushel decrease from last month due to a reduction in yield estimates. Corn yields were reduced by 2.4 bushels per acre to 171.0 bushels, although still a record.
Domestic corn use for 2014/2015 was lowered by 75 million bushels due mostly to a decrease in feed and residual use. Corn used for ethanol production was estimated 25 million bushels higher. Corn ending stocks for 2014/2015 were estimated 121 million bushels lower to 1.877 billion. Projected season-average price range for corn in 2014/2015 was raised 15 cents on each end of the range to $3.35 to $3.95 per bushel.
Global course grain supplies were estimated 3.7 million tons lower as a result of the reduction in the U.S. corn crop.
The USDA Grain Stocks report estimated corn stocks stored in all positions to be 11.2 billion bushels, a 7% increase from last year as of December 1, 2014. On-farm storage increased to 7.09 billion bushels, an 11% increase from last year. Off-farm stocks were reported at 4.12 billion bushels, a 1% increase from last year. The increase in on farm storage is due to the steep decline in the price of corn this year. Farmers with the ability to store grain have done so trying to wait out low prices.
Soybeans
US soybean production for 2014/2015 increased 11 million bushels to 3.969 billion due to increased yield more than offsetting a 300,000 acre decrease in harvested acres. Soybean yield is up 0.3 bushels per acre to 47.8 bushels per acre. Exports for soybeans increased 10 million bushels to 1.770 billion bushels due to record exports in the first quarter of the marketing year.
Ending stocks for 2014/2015 are unchanged from last month remaining at 410 million bushels. U.S. season-average price forecast for soybeans in 2014/2015 was increased 20 cents at the midpoint to $9.45 to $10.95 per bushel.
Global soybean production was increased by 1.6 million tons, to 314.4 million, due to increases in the U.S. and Brazil. The Brazilian soybean crop is estimated at 95.5 million tons, a record if realized.
The USDA Grain Stocks report estimated soybean stocks stored in all positions to be 2.52 billion bushels, a 17% increase from last year as of December 1, 2014. On-farm storage increased substantially from last year being reported at 1.22 billion bushels, a 28% increase from a year ago. Off-farm stocks are at 1.31 billion bushels, a 9% increase from last year. Similar to corn, farmers with unsold soybeans are waiting out low prices holding a significant amount of soybeans on farm.
Wheat
Feed and residual use for 2014/15 were 150 million bushels, a 30 million bushel decrease reflecting disappearance for June-November as reflected on the Grain Stocks report for December 1. US Wheat supplies for 2014/2015 were increased 0.1 million bushels due to an increase in beginning stocks. Ending stocks were increased 33 million bushels to 687 million. Projected 2014/2015 season-average price was 10 cents higher at both ends of the range to $5.90 to $6.30.
World wheat production was raised 1.2 million tons from an already record estimate. Increased production was mainly a result of Ethiopian production rising 1.1 million tons.
The USDA Grain Stocks report estimated wheat stocks stored in all positions to be 1.52 billion bushels, a 3% increase from last year as of December 1, 2014. On-farm storage was estimated at 473 million bushels, a 19% increase from last year. Off-farm stocks came in at 1.05 billion bushels down 2% from a year ago. Continuing the trend, farmers with the ability to store grain did so hoping to wait out low prices. The strengthening American dollar has also led to a decline in global demand as domestic crops have become less competitive.
Outlook
Global turmoil in the Black Sea region continues to steer the market as Russia’s application of a duty to all wheat exports in an effort to curd the domestic price of wheat has forced buyers to search elsewhere for their wheat. Reports out of Ukraine have also suggested the possibility of the government applying some sort of deterrent on the export of wheat as the country struggles with record setting inflation. Government officials claim that those rumors are false, but a meeting on January 13, with the agricultural ministry will provide more light on the future of Ukrainian exports.
Domestically many analysts are expecting even more acres to go to soybeans next year as the price ratio to corn remains in their favor. A more difficult credit environment for farmers has also been suggested and in response farmers have cut back on purchasing yield benefiting inputs like fertilizer and pesticides. Others reportedly plan to plant conventional non-gmo crops to take advantage of the price discount paid for them.