January WASDE report shows large crop inventories in the U.S.

Jan 15, 2018

Corn ending stocks were up by 40 million bushels

By Diego Flammini
News Reporter
Farms.com

The first World Agricultural Supply and Demand Estimates (WASDE) report for 2018 highlighted American farmers’ successful 2017 crop year.

“We’ve still got big crops everywhere,” Moe Agostino, chief commodity strategies with Farms.com Risk Management, said after a live web analysis of the USDA’s monthly report.

But that doesn’t mean farmers should be quick to make any marketing decisions, Agostino said.

“The report wasn’t a game changer,” he said. “For the market to really move at all here in the next quarter, I doubt it would do anything. You’re going to have to wait to see what the weather in South America and here does.”

U.S. farmers produced 14.604 billion bushels of corn in 2017, according to the report. That number is up 26 million bushels from December’s report. Producers also harvested a record corn yield of about 176 bushels per acre, and ending stocks were up by 40 million bushels.

Corn prices could range between US$2.95 and $3.55, according to the USDA, thanks to the higher production numbers and what Agostino called an overestimation of the export market.

“The yield is bigger, the production is bigger, and there’s better genetics and technology,” Agostino said. “The demand was changed slightly but not enough to offset the final yield.”

When it comes to the 2018 winter wheat crop, it’s still to early to tell if weather has caused any considerable damage.

Many fields are experiencing cold temperatures without any snow cover to keep the crop insulated. But farmers may just have to wait and see how the crop reacts.

“It’s hard to kill a wheat crop this time of year,” Agostino said. “We can talk about it, but until the crop comes out of dormancy and we see some crop progress reports, it’s going to be tough to estimate where we’re at.

“Just because you see a 10-year low on crop conditions doesn’t mean it’s doing much damage to yield. You would have to see that 10-year low number much lower to see any damage to the crop.”

U.S. wheat ending stocks were up by 29 million bushels to 989 million bushels, according to the USDA.

Farmers could expect to receive between US$4.50 and $4.70 per bushel, according to the report.

Soybean ending stocks were also up compared to the December WASDE.

The USDA reported December soybean ending stocks at 470 million bushels, which is an increase of 25 million bushels.

The average farm price for soybeans, according to the USDA, is between US$8.80 and $9.80 per bushel. But there are still opportunities for that price to go up, Agostino said.

“We’ve still got about 35 weeks left” in the marketing year, he said. “I think we need to average about 20 million bushels of exports per week with a lower U.S. dollar.”

The next WASDE report will be released on Feb. 8.

For exclusive access to Moe Agostino's live monthly WASDE analysis and other risk management services, sign up for a free eight-week trial.

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