With record crop, wheat demand remains good

Posted October 13, 2016

While domestic ethanol production increased by 3.2 percent during the 2015-16 corn marketing year, the USDA's Grain Crushings and Co-Products Production reports indicate that corn used for fuel ethanol production totaled only 5.206 billion bushels, an increase of 0.1 percent from use during the previous year.

Downward pressure on corn prices is likely after the crop posted a key reversal Wednesday following the release of USDA's October 12 reports, says Jerry Gulke, president of the Gulke Group. Rain was plentiful just about everywhere in August 2016, while many major production states grappled with pockets of dryness in the previous two years (http://reut.rs/2dOAc7D).

The USDA raised its forecast of USA 2016-17 soybean ending stocks to 395 million bushels, from 365 million in September, and up from 197 million bushels at the end of 2015-16. And it's far better than a year ago, when crops were damaged by floods. This is still above 68 percent a year ago.

On soybeans, the USDA raised its USA yield estimate to a record-high 51.4 bushels per acre.

The USDA corn production forecast was above the pre-report trade average of 15.040 billion bus and yield was identical to the trade average of 173.4 bushels an acre.

Farmers in east central Iowa have harvested 29 percent of their corn crop and 47 percent of their soybeans.

With record crop, wheat demand remains good
With record crop, wheat demand remains good

Soybean ending stocks were seen at 395 million bushels, up from the September estimate of 365 million bushels, according to USDA's monthly supply and demand report.

Weather forecasts the next 14 days now have the Lakes states above normal precip so they may suffer a bit to bring in the harvest.

Traders had been expecting the quarterly corn stocks estimate to be closer to 1.75 billion bushels. USA production is down 36 million bushels from a month ago to 15.057 billion bushels.

USDA also pegged domestic corn ending stocks for 2016/17 at 2.320 billion bushels, compared to its September estimate of 2.384 billion bushels. December wheat rose 1.3% to $4.12 1/2 per bushel in Chicago. Wheat exports out of Kansas and Chicago are improving. The pace of export inspections and export sales during the first few weeks of the marketing year has been brisk.

November Soybeans are trading at 965, up 10 3/4 cents/bushel. That means prices will be poor (as they are) while we bottom the market, likely during harvest.