USDA’s World Agricultural Supply and Demand Estimates are forecasting 2015-16 world cotton stocks to decline for the first time since the 2009-10 marketing year as consumption outpaces production due to lower cotton prices.

That’s one of the few pieces of good news in the May report approved and released by USDA’s World Agricultural Outlook Board on Tuesday (May 11). The report represents USDA’s initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for 2015-16.

The report also said USDA expects the 2015 U.S. corn crop to be down 586 million bushels to 13.6 billion compared to 2014 due to reduced plantings and expected lower yields. U.S. soybean production is projected to reach 3.85 billion bushels, down 119 million bushels from 2014 with the potentially record harvested area offset by lower yields.

Grain sorghum production is projected to be only marginally higher – 435 million bushels in 2015-16 vs. 433 million in 2014-15 on a higher planted acreage of 7.9 million vs. 7.1 million. USDA says grain sorghum prices will remain in a range of $3.40 to $4.20 per bushel in 2015-16.

World cotton production is expected to fall from the 119.28 million bales estimated for 2014-15 to 111.25 million bales in 2015-16 or about 7 percent. World consumption is expected to increase from 111.45 million bales in 2014-15 to 115.29 million bales in 2015-16 or an increase of 3.5 percent.

As a result, “higher beginning stocks compared with last season are about offset by sharply lower world production, as most of the world’s cotton-producing countries respond to lower prices,” the WASDE report said.

Positive growth

“World consumption is raised 3.5 percent due mainly to positive world economic growth and the lagged effect of falling cotton prices. World trade is reduced marginally, as a drop of 1.7 million bales in China’s imports is mostly offset by increases in other countries.”

What’s happening in the world market is being mirrored by the U.S. with production expected to fall from an estimated 16.32 million bales in 2014-15 to 14.5 million in 2015-16 both due to lower plantings (11.04 million acres in 2014 vs. 9.55 million in 2015) and reduced yields (838 pounds per acre in 2014 vs. 809 pounds per acre in 2015).

The U.S. production forecast factors in improved moisture conditions for growers in Texas, the World Outlook Board said. The decline in production is expected to offset a projected increase in ending stocks, leaving the 2015-16 carryover estimate at 4.4 million bales.

China’s production and consumption, meanwhile, continue to be the numbers to watch because of the country’s huge impact on the world textile market.

Production is expected to fall from 30 million in 2014-15 to 27 million bales in 2015-16; imports from 7.7 million bales to 6 million bales; and consumption is expected to increase from 35 million to 36 million bales. As a result, ending stocks would be reduced by 3 million bales.

“This would account for more than three-fourths of the decline in world stocks, according to the World Agricultural Outlook Board economists. “Despite this reduction, world stocks of 106.3 million bales would still be the second highest on record.

Ag Market Network panel

Cotton marketing specialists on the Ag Market Network’s panel of experts said the WASDE numbers were expected to have little impact on cotton prices given that ending stocks still remain close to a year’s supply of cotton for the world’s textile mills.

The World Agricultural Outlook Board expects U.S. rice supplies to be up 3 percent from 2014-15 and total use to be up 2 percent. “This will lead to an 11 percent increase in 2015-16 ending stocks projected at 47.4 million hundredweight,” it said.

Beginning stocks for 2015-16 are forecast at 42.9 million hundredweight. Projected 2015-16 imports at a record 24.5 million hundredweight. U.S. rice production for 2015-16 is projected at 219.0 million hundredweight.

Long-grain rice production is projected at 162.0 million hundredweight and combined medium- and short-grain production at 57.0 million. All rice harvested area is estimated at 2.90 million acres. Long-grain harvested area is 2.19 million acres. Combined medium- and short-grain harvested area is 0.71 million acres.

“The drought-induced drop in California medium- and short-grain area has attracted more acres of medium-grain rice in the Delta where plantings in 2015 are projected up 3 percent,” the board’s economists said.

U.S. all rice average yield is projected at 7,562 pounds per acre, nearly the same as last year. U.S. 2015-16 all rice total use is projected at 239.0 million hundredweight with domestic and residual use at 131.0 million and exports at 108.0 million. Long-grain rice exports are projected at 76.0 million hundredweight and medium- and short-grain rice exports at 32.0 million.

Lower prices

U.S. all rice ending stocks for 2015-16 are projected at 47.4 million hundredweight with long-grain ending stocks at 34.1 million hundredweight and medium- and short grain rice stocks at 11.0 million. The U.S. 2015-16 long-grain rice season-average farm price is projected at $10.00 to $11.00 per hundredweight compared to a revised $11.80 to $12.20 for the previous year. The medium- and short-grain price is projected at $17.80 to $18.80 per hundredweight compared to a revised $17.80 to $18.20 for the year earlier.

U.S. feed grain supplies for 2015-16 are projected to slightly exceed the record level of 2014-15 as larger beginning stocks more than offset lower expected production. The U.S. corn yield is projected at 166.8 bushels per acre, down 4.2 bushels from the 2014-15 record based on a weather adjusted yield trend that assumes normal summer weather. The 2015 yield outlook is not raised, despite the rapid pace of late-April and early May planting, as more than 90 percent of the variability in the corn yield is determined by July precipitation and temperatures in the Midwest, which are unknowable at this time.

U.S. oilseed production for 2015-16 is projected at 114.1 million tons, down 2.6 percent from 2014-15 mainly on lower soybean production. Harvested area is projected at 83.7 million acres based on a 5-year average harvested-to-planted ratio and planted area of 84.6 million acres.

The soybean yield is projected at a trend level of 46.0 bushels per acre, down 1.8 bushels from last year’s record. Supplies are projected at 4.23 billion bushels, up 3.4 percent from 2014-15 with increased beginning stocks more than offsetting lower production.

“The U.S. season-average soybean price for 2015-16 will decline to $8.25 to $9.75 per bushel compared with $10.05 in 2014-15,” the report said. “Soybean meal prices are forecast at $305 to $345 per short ton compared with $365 in 2014-15. Soybean oil prices are forecast at 29.5 to 32.5 cents per pound compared with 32.0 cents in 2014-15.

The May World Agricultural Supply and Demand Estimates (WASDE) report is now available in PDF, XML, and Microsoft Excel formats at:

http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1194