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WASDE Report for 11/10/15


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WHEAT:  Projected U.S. exports for 2015/16 are lowered 50 million bushels to 800 million, and ending stocks are raised by an equal amount to 911 million.  Exports would be the lowest since 1971/72; ending stocks are the highest since 2009/10.  Wheat exports are lowered on a very slow pace to date and continued lack of U.S. price competitiveness.  The projected range for the 2015/16 U.S. season-average farm price is narrowed 5 cents on both the high and low ends to $4.80 to $5.20 per bushel. 


Global wheat supplies for 2015/16 are lowered 0.2 million tons on decreased beginning stocks partially offset by a small production increase.  A 2.0-million-ton increase for EU production is partially offset by a 1.0-million-ton reduction for Australia and a 0.5-million-ton decrease for Russia.  The EU and Russia changes stem from harvest reports to date.  The Australia change reflects very hot and dry October conditions affecting grain fill and lowering yield potential.  The global wheat crop is now projected at 733.0 million tons, a third consecutive record. 

Foreign wheat exports for 2015/16 are raised 1.2 million tons led by a 1.0-million-ton increase for Canada on pace to date.  Exports are also raised 0.5 million tons each for Brazil and EU on increased supplies of feed wheat and a larger crop, respectively.  Australia exports are lowered 1.0 million tons on a smaller crop.  Total world exports are down 0.2 million tons due to a 1.4-million-ton reduction for the United States.  Several mostly offsetting changes are made to importing countries.  Total world usage is up 1.0 million tons, led by China.  Ending stocks are lowered 1.2 million tons to 227.3 million, but remain record large.  


COARSE GRAINS:  Projected 2015/16 U.S. feed grain supplies are raised this month on higher forecast production for corn and sorghum.  Corn production is forecast 99 million bushels higher with the national average yield raised 1.3 bushels per acre to 169.3 bushels, just 1.7 bushels below last year’s record.  Projected domestic corn use for 2015/16 is lowered 50 million bushels as a 25-million-bushel increase in expected feed and residual use, with the larger crop and lower expected prices, is more than offset by a 75-million-bushel reduction in corn used to produce ethanol.  The reduced outlook for corn use for ethanol is driven by significant adjustments to the 2015/16 sorghum balance sheet this month.  U.S. sorghum exports for 2015/16 are projected 105 million bushels lower.  Declining premiums for sorghum offered by exporters and large price discounts for sorghum relative to corn in interior cash markets drive expectations for higher use in ethanol production and higher feed and residual use.

Total U.S. corn use for 2015/16 is projected 100 million bushels lower with exports lowered 50 million bushels.  U.S. corn export sales and shipments lag well behind last year at this time and U.S. supplies remain uncompetitive in many foreign markets as corn from Brazil continues to undercut U.S. offerings.  U.S. corn ending stocks for 2015/16 are projected 199 million bushels higher at 1,760 million.  End-of-year stocks are projected 29 million bushels higher than those reported for 2014/15.  The 2015/16 season-average corn price received by producers is projected 15 cents lower on both ends this month to $3.35 to $3.95 per bushel.

This month’s sharp rise in 2015/16 global coarse grain supplies is driven mostly by downward revisions to China corn feeding for 2013/14 through 2015/16.  China corn beginning stocks are raised 18.8 million tons for 2015/16 reflecting the impact of lower estimated feed use for the preceding marketing years.  Partly offsetting the increase in China is a 7.0-million-ton reduction for 2015/16 Brazil corn beginning stocks.  Brazil corn feeding is raised for 2006/07 through 2011/12.  (Balance sheet revisions for China and Brazil with a comparison to the October estimates and projections will be available at http://www.usda.gov/oce/commodity/wasde/historical.htm following today’s WASDE release.)  

This month’s sharp rise in 2015/16 global coarse grain supplies is driven mostly by downward revisions to China corn feeding for 2013/14 through 2015/16.  China corn beginning stocks are raised 18.8 million tons for 2015/16 reflecting the impact of lower estimated feed use for the preceding marketing years.  Partly offsetting the increase in China is a 7.0-million-ton reduction for 2015/16 Brazil corn beginning stocks.  Brazil corn feeding is raised for 2006/07 through 2011/12.  (Balance sheet revisions for China and Brazil with a comparison to the October estimates and projections will be available at http://www.usda.gov/oce/commodity/wasde/historical.htm following today’s WASDE release.)  


Global coarse grain production for 2015/16 is raised 2.3 million tons with the largest increase for U.S. corn.  Corn production is also increased for Argentina and Brazil, but lowered for Ukraine, South Africa, India, and EU.  Global sorghum production is lowered slightly with a reduction for Mexico more than offsetting the U.S. increase.  Higher EU barley production is mostly offset by a reduction for Russia.  EU oats and rye production are each raised slightly, but India millet is lowered.

Global 2015/16 coarse grain consumption is lowered 10.0 million tons mostly reflecting reductions in China corn and sorghum feeding.  Corn consumption is also lowered for EU with reductions in food, seed, and industrial (FSI) use and feed and residual use, with the latter driven by higher expected wheat feeding.  China FSI use is raised on prospects for more corn processing.  Global coarse grain trade for 2015/16 is lowered with corn and sorghum exports both reduced.  Corn exports are lowered for Ukraine and India, but raised for Argentina.  Brazil corn exports are raised for 2014/15, also affecting U.S. 2015/16 marketing year export prospects. 


Lower world sorghum exports for 2015/16 reflect this month’s change for the United States.  Sorghum imports are lowered for China with only a small and partly offsetting increase made for Mexico.  


Global coarse grain ending stocks for 2015/16 are raised 24.3 million tons with nearly all of the increase for China corn.  More than half of the world’s 2015/16 corn ending stocks are expected to be held in China.  Corn ending stocks outside China are projected 0.3 million tons higher this month.  Higher U.S. and EU corn ending stocks are offset by reductions for Brazil and Indonesia.

RICE:  U.S. all rice production in 2015/16 is forecast at 190.8 million cwt, up 3.0 million from last month, with the increase entirely due to a higher yield. The average all rice yield is forecast at 7,423 pounds per acre, up 116 pounds from last month.  Yields are raised for all states except for Texas and Arkansas.  Yields are lowered for Texas and unchanged for Arkansas.  The California all rice yield is raised 600 pounds per acre to 8,600 pounds.  Long-grain and combined medium- and short-grain rice production are both raised from last month, with long-grain production projected at 132.4 million cwt and combined medium- and short-grain production at 58.4 million. The all rice import forecast is unchanged at 25.5 million cwt.  All rice domestic and residual use is raised 2.0 million cwt to 127.0 million cwt, 1.0 million each in long-grain and medium- and short-grain rice.  All rice exports are raised 1.0 million cwt to 98.0 million cwt with the increase in long-grain. Long-grain exports are projected at 65.0 million, and medium- and short-grain exports at 33.0 million.  All rice ending stocks are projected at 39.8 million cwt, unchanged from last month with long-grain stocks at 21.8 million, and medium- and short-grain at 16.1 million.


The 2015/16 long-grain season-average farm price range is projected at $11.50 to $12.50 per cwt, down $1.30 per cwt on both ends from last month.  The medium- and short-grain farm price range is projected at $17.60 to $18.60 per cwt, up 30 cents per cwt on each end of the range.  The California medium- and short-grain rice price at a midpoint of $21.50 per cwt is up $0.50 per cwt from last month.  The Other States medium- and short-grain rice price at a midpoint of $13.00 per cwt is lowered $1.00 per cwt.  The all rice season-average farm price is forecast at $13.30 to $14.30 per cwt, down $0.90 per cwt on each end of the range.  Lower-than-expected prices published by the National Agricultural Statistics Service (NASS) for August and September, along with price expectations the remainder of the marketing year, support the downward adjustment in rice prices from a month ago.

Global 2015/16 ending stocks are raised 2.7 million tons or 3 percent due mostly to an increase in beginning stocks and a decrease in consumption. Beginning stocks for 2015/16 are raised 1.9 million tons due mostly to downward adjustments in 2014/15 consumption for China and India, that consequently raised 2014/15 ending stocks.  Consumption changes in recent years for China and India are based on reports received from the Agricultural Counselor’s offices in each country.  In China, consumption is lowered for both 2014/15 and 2015/16 due to higher prices, inconsistent quality of state rice reserves, and changing consumption patterns. In India, consumption is lowered and ending stocks are raised to better reflect government of India reports on the stocks situation.  Global production for 2015/16 is lowered 0.5 million tons to 473.5 million, primarily due to smaller crops forecast for Bangladesh, Cambodia, and the Philippines, partially offset by increases for Sri Lanka, South Korea, and the United States.  World consumption is projected at 486.2 million tons, down 1.3 million from last month, but still a record.  Consumption is lowered for Cambodia, China, India, and Vietnam.  Trade for 2015/16 is lowered slightly due mostly to smaller exports by Cambodia, and smaller imports by Sri Lanka and Vietnam.  Global ending stocks are forecast at 91.0 million tons, up 2.7 million from last month, but a decrease of 12.7 million tons from the preceding year, and the lowest stocks since 2007/08.  The 2015/16 stocks-to-use ratio at 18.7 percent is the lowest since 2006/07.

OILSEEDS:  U.S. oilseed production for 2015/16 is forecast at 117.7 million tons, up 2.5 million from the previous estimate on increased soybean production.  Soybean production is forecast at a record 3,981 million bushels, up 93.6 million on higher yields.  The soybean yield is forecast at 48.3 bushels per acre, up 1.1 bushels mainly on gains for Iowa, Illinois, and Minnesota.  Soybean supplies are projected up 2 percent from the October forecast.  Soybean crush is raised 10 million bushels to 1,890 million on higher meal exports.  Soybean exports are also raised with additional supplies.  Ending stocks are raised 40 million bushels to 465 million.  If realized, ending stocks would be the highest since 2006/07.

Soybean oil balance sheet changes for 2015/16 include increased beginning stocks and production, reduced imports and domestic disappearance, and increased exports and ending stocks.  Higher beginning stocks reflect final soybean oil stocks for 2014/15 as reported in the November 2015 NASS Oilseed Crushings report.  Domestic disappearance for 2015/16 is reduced in line with lower domestic use estimated for 2014/15.  Soybean oil ending stocks for 2015/16 are projected at 2,295 million pounds, up 265 million from last month’s forecast.


Soybean and soybean meal prices for 2015/16 are reduced this month.  The U.S. season-average soybean price range is projected at $8.15 to $9.65 per bushel, down 25 cents on both ends of the range.  Soybean meal prices are projected at $300 to $340 per short ton, down $10.00 on both ends.  Soybean oil prices are projected at and 27.5 to 30.5 cents per pound, unchanged from last month.

Global oilseed production for 2015/16 is projected at 531.0 million tons, down slightly from last month.  Lower sunflowerseed, and cottonseed production account for most of the change with nearly offsetting increases projected for soybeans and rapeseed.  Global soybean production is projected at 321.0 million tons, up 0.5 million, with the larger U.S. crop only partly offset by reductions for India, South Africa, and Uruguay.  The India soybean crop is reduced 1.5 million tons to 9.5 million on lower projected yields.  Inconsistent rainfall during the growing season and late-season heat results in below-average yields for the third consecutive year.  Global rapeseed production is raised to 67.1 million tons.  Increased production projected for Canada is only partly offset by reductions for Australia, Pakistan, and Russia.  Global sunflowerseed production is reduced 0.8 million tons to 39.7 million on lower forecasts for Argentina, Pakistan, and EU.  Other changes include reduced cottonseed production for several countries including Pakistan, China, and EU.


Global oilseed trade for 2015/16 is projected at 147.0 million tons, up 2.6 million from last month.  With higher soybean imports projected for China, exports are raised for the United States, Brazil, and Argentina.  Canada rapeseed exports are also raised with increased China imports.  Global oilseed ending stocks are projected at 94.1 million tons, down 2.2 million from last month.  Soybean stocks account for most of the change with reductions for Argentina, Brazil, South Africa, India, and Canada only partly offset by an increase for the United States.


SUGAR:  U.S. 2015/16 total sugar supply is increased 119,127 short tons, raw value (STRV) from last month to 13.975 million.  Beginning stocks are increased by 69,127 STRV.  Louisiana 2015/16 cane sugar production is increased 50,000 STRV, due to improved sugarcane yield as indicated in NASS’s November 2015 Crop Production.  There are no changes to other sources of supply or to total use.  Ending stocks for 2015/16 are projected at 1.855 million STRV, implying an ending stocks-to-use ratio of 15.3 percent.  For 2014/15, complete-year Sweetener Market Data (SMD) indicates increased total production of 60,798 STRV; increased exports of 4,875; and increased deliveries of 12,219.  Imports for 2014/15 are increased 25,423 STRV, based on USDA and U.S. Census Bureau estimates.  Ending stocks for 2013/14 are estimated at 1.767 million STRV, and the 2013/14 stock-to-use ratio is 14.4 percent.

Mexico 2015/16 total sugar supply is increased 104,933 metric tons (MT) with a beginning stocks increase of 48,908 combined with an increase in production of 56,025.  These changes were made after a review and adoption of new sweetener supply projections made by Mexico’s Comité Nacional Para El Desarrollo Sustentable de la Caña de Azúcar (Conadesuca).  Conadesuca estimates beginning stocks at 810,709 MT and projects production at 6.056 million MT based on mill surveys.  Conadesuca projects 2015/16 sweetener deliveries for human consumption at 5.885 million MT.  Sugar deliveries are projected at 4.388 million MT (20,221 less than their 2014/15 estimate of 4.408 million) and high fructose corn syrup deliveries are projected at 1.497 million MT, dry weight (up 53,231 over their 2014/15 estimate of 1.444 million).  These use projections are adopted, but export projections for 2015/16 are unchanged.  The 2015/16 ending stocks are projected at 981,975 MT, implying an ending stocks-to-consumption ratio of 22.4 percent.

LIVESTOCK, POULTRY, AND DAIRY:  The total meat production forecasts for 2015 and 2016 are little changed from last month due to largely offsetting changes in red meat and poultry.  Beef production for 2015 and 2016 is lowered on slower expected marketings from feedlots into early 2016.  However, the slower pace of slaughter is partly offset by higher expected carcass weights. Pork production is lowered for 2015 on a slower expected pace of slaughter and slightly lighter carcass weights during the fourth quarter.  The forecast for 2016 is unchanged.  However, broiler production is forecast higher for both 2015 and 2016.  September production was higher than expected, and hatchery data points to higher production into early 2016.  Turkey production in September was also higher than expected, which boosted 2015 production, although no change was made to the forecast quarters.  Egg production for 2015 is adjusted based on lower September hatching egg production, but production forecasts into 2016 are unchanged.

Beef imports for 2015 are reduced to reflect the pace of trade to date; the forecast for 2016 is unchanged.  Beef exports for 2015 are lowered as demand remains relatively weak; no change is made to 2016.  Pork import and export forecasts are unchanged, but small adjustments are made to third-quarter 2015 to reflect September trade data.  Broiler exports for 2015 and 2016 are reduced from last month as the pace of export recovery has been slower than expected.  


Cattle and hog prices for 2015 and 2016 are unchanged from last month.  Broiler prices are lowered for both 2015 and 2016 as large broiler meat supplies are expected to continue to pressure markets.  Turkey prices are unchanged for 2015 on current price strength, but the forecast for 2016 is reduced slightly.  Egg prices are lowered into first-half 2016, reflecting recent price movements.

The milk production forecasts for 2015 and 2016 are reduced from last month as the dairy herd is expected to decline more rapidly from its second-quarter peak and growth in milk per cow in 2015 remains slower than expected.  Imports are reduced on both a fat and skim-solids basis for both years as imports of milk protein concentrates and casein are expected to be lower.  Exports are reduced for 2015 on weaker butter, cheese and whey sales.  Largely uncompetitive prices are likely to limit growth in export sales of butter and to a lesser extent, cheese in 2016, and fat-based exports are reduced.


Strong domestic demand for butter is expected to support relatively high butter prices during the remainder of 2015, but supplies are expected to be large, and the price forecast for 2016 is lowered.  Cheese prices are lowered for 2015 and 2016 as supplies remain large.  The nonfat dry milk (NDM) price is reduced for 2015 and 2016 as prices move closer to international levels.  Whey prices are unchanged from last month.  Class III prices are lowered for 2015 and 2016 reflecting the lower 2015 cheese price forecasts.  Class IV prices are raised for 2015 due to the stronger forecast butter price which more than offsets the lower NDM price.  However, the 2016 price is lowered as cheese and NDM forecasts are reduced. The all milk price is raised to $17.00 to $17.10 per cwt for 2015 and lowered to $15.95 to $16.85 per cwt for 2016.

COTTON:  The 2015/16 U.S. cotton balance sheet shows marginally lower production relative to last month, with ending stocks unchanged.  Production is reduced 57,000 bales, as decreases for the Southeast and Delta are mostly offset by an increase for the Southwest.  Domestic mill use and exports are unchanged.  The forecast range of 55 to 63 cents per pound for the marketing year average price received by producers is narrowed 1 cent on both ends, with the mid-point unchanged from last month at 59 cents. 


This month’s 2015/16 world supply and demand estimates include lower production, consumption, and ending stocks.  Forecast production is reduced for India, Pakistan, China, Greece, Mali, and Mexico, based on current indications of northern hemisphere harvest results.  With consumption reduced mainly for China and Pakistan, total world consumption is now projected to grow a modest 1.1 percent this season.  World ending stocks are projected at 106.1 million bales, nearly 6 million bales below the beginning level.


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Currently a member of The Chicago Board of Trade (CBOT) and registered with the Commodity Futures Trading Commission (CFTC) as a floor broker and a member of the National Futures Association (NFA). I started my career in 1973 on The Chicago Mercantile Exchange trading floor working for a major firm. Three years later I purchased my first membership and began what would become a thirteen-year commitment to trading soybeans for my own account on the trading floor. I began trading options on futures since their inception in Chicago about twenty years ago; doing so, I traded in various pits on the trade floor. 

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