USDA’s current expectations are for record soybean and corn production, near-record, long-grain rice production, a larger wheat crop, and slightly larger cotton production.

USDA’s first survey-based yield forecast has corn and soybeans at record levels of 175.1 bushels and 48.9 bushels per acre respectively, cotton at 800 pounds per acre, all rice at 7,659 pounds per acre or 170.2 bushels per acre, and winter wheat at 54.9 bushels per acre.

By the close of market activity on Friday, Aug. 12, the markets seemed to feel comfortable with pricing activity preceding the release of the August USDA Supply and Demand Estimates report and made no significant price adjustments with corn and wheat slightly higher, soybeans slightly lower, rice prices up and cotton prices down.

Presently, I do not see any real need for the price structure in these markets covered here to deviate significantly from pre-WASDE release. Simplistically, corn, soybeans, and rice are likely in a bottoming process. Wheat is likely finishing its corrective upside price activity before finishing its bottoming process, and cotton likely still needs to finish a near term topping process.  

Long-grain rice – production 2015/16 and 2016/17, 133 and 183 million hundredweight respectively, 38 percent increase over 2015/16 and .2 percent previous month.

Soybeans – production 2015/16 and 2016/17, 3.92 and 4.06 billion bushels respectively, 3.3 percent increase over 2015/16 and 4.6 percent above previous month.

Cotton – production 2015/16 and 2016/17, 12.89 and 15.88 million bales respectively, 23.2 percent increase over 2015/16 and .5 percent above previous month.

Corn – production 2015/16 and 2016/17, 13.60 and 15.15 billion bushels respectively, 11.4 percent increase over 2015/16 and 4.2 percent above previous month.

Wheat – production 2015/16 and 2016/17, 2.05 and 2.32 billion bushels respectively, 13.1 percent increase over 2015/16 and 2.6 percent above previous month.

Long-grain rice – domestic demand 2015/16 and 2016/17, 88 and 105 million hundredweight respectively, 19 percent increase over 2015/16 and no change from previous month.

Soybeans – domestic demand 2015/16 and 2016/17, 2 and 2.06 billion bushels respectively, 2.8 percent increase over 2015/16 and .8 percent above previous month.

Cotton – domestic demand 2015/16 and 2016/17, 3.50 and 3.60 million bales respectively, 2.9 percent increase over 2015/16 and no change from previous month.

Corn – domestic demand 2015/16 and 2016/17, 11.76 and 12.32 billion bushels respectively, 4.7 percent increase over 2015/16 and 1.4 percent above previous month.

Wheat – domestic demand 2015/16 and 2016/17, 1.16 and 1.36 billion bushels respectively, 17.8 percent increase over 2015/16 and 2.6 percent above previous month.

Long-grain rice – exports 2015/16 and 2016/17, 71 and 81 million hundredweight respectively, 11.4 percent increase over 2015/16 and no change from previous month.

Soybeans – exports 2015/16 and 2016/17, 1.88 and 1.95 billion bushels respectively, 3.7 percent above over 2015/16 and 1.6 percent above previous month.

Cotton – exports 2015/16 and 2016/17, 9.20 and 11.50 million bales respectively, 25 percent increase over 2015/16 and no change from previous month.

Corn – exports 2015/16 and 2016/17, 1.93 and 2.18 billion bushels respectively, 13 percent increase over 2015/16 and 6.1 percent above previous month.

Wheat – exports 2015/16 and 2016/17, 777 and 950 million bushels respectively, 22.6 percent increase over 2015/16 and 2.7 percent above previous month.

USDA estimates 2016/17 U.S. oilseed production at 120.2 million tons, up 4.8 million from last month due to a higher soybean production forecast.

Soybean harvested acreage is unchanged from the July estimate of 83 million acres.

USDA’s first survey-based soybean yield forecast  estimates the U.S. soybean yield at a record 48.9 bushels per acre which is slightly above last year’s then record of 48 bushels per acre. 

Soybean production for 2016/17 is now estimated at 4.06 billion bushels.

Total soybean supplies for 2016/17 are projected at a record 4.35 billion bushels.

The U.S. season-average soybean price for 2016/17 is forecast at $8.35 to $9.85 per bushels, down 40 cents on both ends of the range.

Global oilseed production for 2016/17 is projected at 543.5 million tons, up 7.0 million from last month. Global soybean production is projected at a record 330.4 million tons, up 4.5 million.

The 2016/17 U.S. cotton supply and demand estimates include marginally higher production and ending stocks, with the farm price projected 7 percent above last month.

Production is forecast at 15.9 million bales based on NASS’s first survey of the 2016 crop.

Domestic mill use and exports are unchanged from last month, raising ending stocks to 4.7 million bales, equivalent to 31 percent of total use.

The marketing year average price received by producers is projected to range from 57 to 69 cents per pound.

The midpoint of 63 cents per pound is raised 4 cents from last month’s estimate based on recent price activity and tighter global cotton supplies.

Projected world 2016/17 cotton ending stocks are down 2 percent this month, due to combination of lower beginning stocks and production.

World ending stocks are lowered 1.7 million bales to 89.6 million.

Stocks outside of the United States and China are projected at 36 percent of total use, similar to the estimated 2015/16 ratio.

Corn production is forecast at a record 15.2 billion bushels, up 613 million from the July projection.

The season’s first survey based corn yield forecast, at 175.1 bushels per acre, is up 7.1 bushels from last month’s trend based projection and above the record 171.0 bushels in 2014/15.

U.S. corn supplies for 2016/17 are projected at a record 16.9 billion bushels, up 1.5 billion from last year.

Total U.S. corn use for 2016/17 is projected 300 million bushels higher at a record 14.5 billion.

Exports are projected 125 million bushels higher, reflecting the relative competitiveness of U.S. corn on the world market and large new-crop outstanding sales.

Corn-ending stocks for 2016/17 are projected 328 million bushels higher at 2,409 million bushels and, if realized, would be the highest since 1987/88.

The projected range for the season-average corn price received by producers is lowered 25 cents on both ends to $2.85 to $3.45 per bushels. 

Global 2016/17 coarse grain ending stocks are projected 13.4 million tons higher reflecting larger corn and barley stocks. Global corn stocks are projected 12.4 million tons higher with the United States accounting for two-thirds of the increase.

Monthly change from July 12, 2016               - 4.8 percent

Change from 2015/16 on July 12                   - 4.6 percent

Potential price weakness into the $9.00 hundredweight or $4.05 bushels. area     

Rice needs a new demand source from current and/or new customers

Change from July 12, 2016                             - 4.2 percent

Change from 2015/16 on July 12                   + 1.7 percent

Possible price weakness into the $9.00 area. Treat this market with a great deal of respect.                   

Change from July 12, 2016                             + 6.8 percent

Change from 2015/16 on July 12, 2016         + 8.6 percent

Potential price strength into the 4th quarter of $0.85  

Change from July 12, 2016                             - 7.4 percent

Change from 2015/16 on July 12                   - 12.5 percent

2 possibilities

Change from July 12, 2016                             - 2.6 percent

Change from 2015/16 on July 12                   - 24.3 percent

Presently likely correctively price activity into the $4.50 to $4.75 area

Followed by a likely decline to a low of $3.25 to $3.75        

Fiscal and monetary policy intervention to manage a slow growth global economy will continue to influence market price action and as such will be monitored closely by market participants. I expect that this is going to be an ongoing exercise of risk-on and risk-off for the foreseeable future.

U.S. treasuries are very likely to remain sideways given their near-term bullish move (lower yields). This market apparently has not topped.

Near-term the dollar should be sideways bias with the global economy in a reflation mode.   

U.S. equities should be watched carefully; let the price define strength, weakness, or simply sideways corrective activity over-time. I expect U.S. equities need additional time to consolidate before moving significantly higher.

Near term the mostly favorable production weather could turn unfavorable and supportive for rice, soybeans, cotton, and corn prices. 

Sep. 12, 2016

Oct. 12, 2016

Nov. 9, 2016

Dec. 9, 2016

Jan. 2017 (TBD)

2016 acreage data as of August 1, 2016 (ZIP, 21 MB, Aug. 12, 2016)