U.S. corn markets are holding their own and wheat remains in the doldrums following the latest World Supply and Demand Estimates (WASDE) released this week.
Mark Welch, Texas A&M AgriLife Extension economist, reports in his weekly updates that neither another increase in estimated average yield for the 2017 U.S. corn crop, nor a small decrease from last month in wheat harvested acreage and a small bump in average yield moved the market needle.
Welch says the latest WASDE showed another increase in the average yield of the U.S. corn crop, up 1.9 bushels per acre to 171.8. “This raised the size of the U.S. corn crop by 96 million bushels,” Welch says. “Most of that increase was offset by higher feed and food use in the last marketing year (as reflected in the September Grain Stocks) as beginning stocks were lowered 55 million bushels, and feed and food use are higher in the current marketing year, up 35 million bushels.”
He says ending stocks for 2017/18 increased by 5 million bushels and the stocks to use ratio “was virtually unchanged, and the average farm price estimates held steady.”
The report indicates world corn production up by 6.2million metric tons. “The U.S. accounts for most of the increase in the major production areas reported in the WASDE, up 2.43 million metric tons.” Most other producers recorded little change. Welch says the accompanying World Agricultural Production report from the Foreign Agricultural Service shows Nigerian corn production up 3.60 million metric tons, a 52 percent increase.
“But these higher production numbers were offset by an increase in total use of 7.7 million metric tons, which lowered ending stocks and the days of use on hand at the end of the marketing year from a 70-day supply last month to 69 days.”
Welch offers a market plan update, based on his “phantom” crop each week. “I am 80 percent sold on the 2017 corn crop and will price the remaining 20 percent at harvest. I am turning my attention to the December 2018 contract and am prepared to make sales against next year’s crop if we get a significant late season rally.”
The U.S. wheat supply numbers in the WASDE reflect numbers from the Small Grains Summary: a small decrease in harvested area and a 0.7 bushel per acre increase in yield. “This production gain was offset by a slightly smaller carryover number from 2016/17.”
Consumption shows wheat for feed in the current marketing year was cut by 30 million bushels, “most likely because of plentiful feed grain stocks. With no other changes, this number raised the ending stock estimate and stocks to use ratio. Price forecast numbers were unchanged.
“The portion of the Southern High Plains in some degree of drought decreased from 25 percent to 21 percent this week. The driest areas of this region are western Arkansas, southeast Oklahoma, northeast Texas, and parts of South Texas. Conditions have improved considerably in Kansas. The drought severity and coverage index (DSCI) for the Southern Plains decreased from 32 to 27 this week, well below an average reading for October.”
Welch’s wheat market plan shows 20 percent of the 2018 crop is priced. “I expect to add to that total when we get a better handle on acres and yield prospects.”