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U.S. Wheat Crop Down 20%, Strong Exports to Boost Soy Price, Says USDA

U.S. wheat growers will reap their smallest crop in 11 years, down 20% from 2016, while the farmgate prices for soybeans will rise slightly, to $9.60 a bushel, on the strength of record exports despite unrelentingly high stocks, said USDA analysts.

At its annual Outlook Forum, USDA projected a soybean crop of 4.180 billion bushels, the second largest ever; a corn crop of 14.065 billion, the third largest ever; and a wheat crop of 1.837 billion bushels. Growers are projected to plant a record 88 million acres of soybeans, up 2% from last year; 90 million acres of corn, down 7%; and 46 million acres of wheat, down 8%.

Winter wheat sowings were smallest since 1909, driving the contraction in the overall crop. USDA says the smallest crop since 2006 will pull down 2017/2018 ending stocks to 905 million bushels, lowest in three years but far above average. Nonetheless, the season-average wheat price is projected to zoom to $4.30 a bushel, up 45¢ from the forecast for the 2016 crop.

“The prospect of lower 2017 HRW acreage ... and relatively tight supplies for hard red spring wheat are supportive for U.S. wheat prices,” the USDA reported. World wheat production set records for four years in a row but is projected to ebb this year.

USDA projected a 2% decline in soybean production from the 2016 record harvest. Slightly larger exports and domestic crush, up slightly to a record 1.945 billion bushels, will boost soybean use slightly and help to work down the carryover from the record crop of 2016. Ending stocks would be unchanged at 420 million bushels. Despite “ample ending stocks,” USDA projected a 10¢ rise in the season-average soybean price, to $9.60 a bushel.

“Strong global demand is likely to continue into the new year, boosting U.S. export volume and lending support to prices,” said USDA, forecasting a record 2.125 billion bushels of exports. “Production gains in South America will support additional exports from the region, leading to a slight decline in U.S. global export share despite higher shipments.” If recognized, the projection would top the forecast for record exports of 2.050 billion bushels this marketing year.

With the soy/corn ratio strongly favoring soybeans – the strongest February ratio since 1997 – corn plantings are projected to drop by 7% for a crop that is nearly 1.1 billion bushels smaller than last year. With the projected decline in feed use and exports, 2017/2018 ending stocks are projected for 2.215 billion bushels, compared with 2.320 billion forecast for this marketing year.

Corn for ethanol was projected for 5.4 billion bushels in 2017/2018, up by 50 million bushels from the current trade year. Ethanol production was a record 15.3 billion gallons in 2016. “Continued low gasoline prices and economic growth support an increase in per-capita miles driven and greater consumer purchases of heavier, relatively less fuel-efficient vehicles,” said USDA.

Corn and soybeans are the two most widely planted crops in the country. USDA said those crops would cover a record 178 million acres this year, up from the mark of 177.4 million acres planted last year. 

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