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WASDE Report for 3/9/16


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WHEAT: There are no changes to this month’s all wheat balance sheets. By class, Hard Red Winter wheat exports are raised 10 million bushels and Hard Red Spring wheat exports are lowered 10 million bushels. Global 2015/16 wheat supplies are lowered 3.3 million tons primarily on decreased production. The largest production change is a 2.4-million-ton decrease for India on updated government statistics. Australia production is lowered 1.5 million tons reflecting the sharp reduction in harvested area by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

The ABARES upward yield revision confirms USDA’s earlier analysis of weather data and satellite imagery. Partly offsetting is a 0.5-million-ton increase for EU production. Global 2015/16 wheat production remains a record. World trade is lowered 0.4 million tons led by a 1.0-million-ton reduction for Australia on the smaller crop. Russia exports are lowered 0.5 million tons on a slow pace and reduced competitiveness to EU origins. Partly offsetting is a 0.5-million-ton increase for Argentina reflecting a very strong shipment pace.

World wheat consumption for 2015/16 is lowered 2.0 million tons to 709.4 million. India consumption is lowered 1.0 million tons reflecting the smaller crop. Consumption in Egypt and Iraq are each lowered 0.4 million tons, and the Philippines is lowered 0.3 million tons. With supplies declining faster than total use, ending stocks are lowered 1.3 million tons but remain record large.

 

COARSE GRAINS: Projected U.S. feed grain ending stocks for 2015/16 are unchanged this month with only small offsetting increases for barley imports and exports and no changes to supply and use projections for the other feed grains. The projected season-average farm price ranges are narrowed 5 cents on each end for corn, sorghum, and barley, leaving the midpoints of the ranges unchanged on the month. The midpoint for the projected corn price remains $3.60 per bushel.

The oats farm price range is projected 10 cents lower on the high end reducing the midpoint by 5 cents to $2.15 per bushel based on the latest reported prices. Corn food, seed, and industrial use is lowered slightly for 2014/15 reflecting a 9-millionbushel reduction in estimated corn used in ethanol production based on revisions to monthly data reported in the March 1 Grain Crushings and Co-Products Production 2015 Summary. An offsetting change is made to 2014/15 feed and residual use as trade and ending stocks are known. Global coarse grain supplies for 2015/16 are projected 1.6 million tons lower. Much of the decline reflects lower corn beginning stocks for Brazil with 2014/15 exports raised this month. Global 2015/16 coarse grain production is lowered with reductions for South Africa and Philippines corn and India millet more than offsetting an increase for Indonesia corn.

Corn production is lowered 0.5 million tons for South Africa with a continuation of drought reducing area and yield prospects further. Philippines corn production and India millet production are each lowered 0.3 million tons on lower yields resulting from dryness. Indonesia corn production is raised 0.3 million tons with higher expected area reflecting both an increase to reported area for 2014/15 and indications that reduced rice planting will boost corn area in 2015/16. Global coarse grain consumption for 2015/16 is raised 0.5 million tons with higher corn use for India and South Africa and increased barley feeding for China more than offsetting a reduction in corn use for Venezuela. Global 2015/16 coarse grain imports are raised. Corn imports are increased for South Africa, Philippines, and Mexico and barley imports are raised for China. Partly offsetting are small reductions in corn imports for Indonesia and Venezuela. Corn exports are raised for Indonesia and South Africa, with the increase for South Africa reflecting higher expected trade with neighboring countries where drought has also affected corn production. Global coarse grain ending stocks for 2015/16 are lowered with corn ending stocks down 1.8 million tons mostly reflecting smaller stocks in Brazil.

 

RICE: U.S. 2015/16 rice exports are lowered 2.0 million cwt this month to 100.0 million on reduced shipments of southern medium-grain rough rice, especially to Turkey. Rice ending stocks are raised 2.0 million cwt to 43.9 million. The all rice price is lowered $0.10 at both ends of the range to $12.40 to $13.20 reflecting lower projected medium- and short-grain prices. Global rice supplies for 2015/16 are raised 1.8 million tons primarily on increased production. The largest production change is a 3.0-million-ton increase for India on updated government statistics. This is partially offset by a 1.0-million-ton decrease for Indonesia on lower area, caused by a poor start to the rainy season. Global imports are raised 0.4 million tons led by a 0.3-million-ton increase for China and a 0.1-million-ton increase for Indonesia. The China increase is on the import pace to date and the Indonesia increase is on the smaller crop. Export changes are very small and mostly offsetting. World rice consumption for 2015/16 is raised 0.6 million tons and remains a record. Consumption is up 0.9 million tons for India and 0.3 million tons for China, both on larger supplies. The largest offsetting reduction is 0.2 million tons for Indonesia on the smaller crop. With the increase in supplies exceeding the rise in consumption, global ending stocks are raised 1.2 million tons to 90.5 million.

 

OILSEEDS: U.S. soybean production is projected at 3,929 million bushels, down slightly from last month due to a revision to South Carolina production. U.S. soybean ending stocks for 2015/16 are projected at 460 million bushels, up 10 million from last month due to a lower crush. Soybean trade projections are unchanged. Crush is reduced 10 million bushels to 1,870 million reflecting a lower projection for soybean meal domestic disappearance.

Soybean meal imports are raised slightly, partly offsetting lower meal production. Despite a lower crush, soybean oil ending stocks for 2015/16 are projected up 120 million pounds from last month to 2,185 million as higher beginning stocks and a lower export forecast more than offset lower production. Higher beginning stocks reflect a revision to soybean oil stocks for 2014/15 as reported in the March 1 Oilseed Crushings 2015 Summary report. Soybean and soybean meal prices are reduced this month and the projected ranges are narrowed. The U.S. season-average soybean price for 2015/16 is projected at $8.25 to $9.25 per bushel, down 5 cents at the midpoint. The soybean meal price is projected at $270 to $300 per short ton, down $5 at the midpoint. Soybean oil prices are projected at 28.5 to 31.5 cents pound, unchanged from last month.

Global oilseed production for 2015/16 is projected at 526.9 million tons, down fractionally from last month. Global soybean production is projected at 320.2 million tons, down slightly from last month. Other oilseed production changes include reduced rapeseed production for Australia, higher peanut production for India, lower palm kernel production for Malaysia, and lower cottonseed production for India and Pakistan. Global oilseed trade for 2015/16 is projected at 149.3 million tons, up 1.2 million mainly reflecting increased soybean exports for Brazil.

The soybean import forecast for China is raised reflecting strong imports to date. Partially offsetting are reduced imports for the EU, Pakistan, and Mexico, where more imports of soybean meal are expected. Global oilseed crush is projected higher reflecting larger soybean crush in Argentina and China. The forecasts for peanut crush in India and rapeseed crush in the EU are also projected higher. Reduced forecasts for cottonseed crush in India, Pakistan, and the United States are partly offsetting. Argentina soybean meal exports are raised with a larger crush forecast. Soybean meal imports are increased for the EU, Pakistan, Mexico, and South Korea. Global oilseed ending stocks are projected at 89.5 million tons, down 1.7 million from last month, mostly due to lower soybean ending stock projections for Argentina and Brazil. Global vegetable oil production is nearly unchanged this month as higher soybean oil and peanut oil production more than offset lower palm oil production in Malaysia. Global vegetable oil stocks are projected at 16.5 million tons, down marginally from last month.

 

SUGAR: U.S. sugar beginning stocks for 2015/16 are increased by 40,990 short tons, raw value (STRV) based on refiners’ corrected data for 2014/15 as published in Sweetener Market Data. U.S. sugar production for 2015/16 is projected at 8.827 million STRV, a decrease of 21,901. Florida cane sugar is decreased 27,492 STRV to 2.108 million. While Florida cane processors have produced only 1.084 million STRV through January due to difficult harvest conditions, no processor has forecast reduced sugarcane production, with all maintaining that the harvest will be extended by at least a month to meet all individual processor sugarcane production goals. The National Agricultural Statistics Service (NASS) forecasts Florida sugarcane for sugar at 16.974 million tons.

Based on refiner projections, sucrose recovery will be lower by 2.5 percent due to the extended harvest. Cane sugar production levels for all other States are unchanged from last month. Beet sugar production is increased by a small 5,591 STRV to 5.016 million as reduced beet pile shrink is partially offset by lower expected sucrose recovery. On March 7, 2016, the Office of the U.S.

Trade Representative (USTR) provided notice of a reallocation of 85,533 metric tons, raw value (MTRV) of the 2015/16 raw sugar tariff-rate quota (TRQ) from countries unable to fill their original allocations to the other countries capable of filling. As a consequence, the raw sugar TRQ shortfall is revised downward from 99,208 STRV to 27,558, a reduction of 71,650. Imports from Mexico are reduced by 33,424 STRV to 1.299 million.

Exports to Mexico for 2015/16 are expected to be lower by 23,476 STRV. Also, since last month, U.S. cane sugar refiners have become more pessimistic about generating export alternatives after Mexico banned duty-free imports of U.S. sugar benefitting from the reexport import program. Sugar exports are, therefore, projected at 100,000 STRV. No other changes to sugar use were made. Ending stocks for 2015/16 are projected at 1.646 million STRV, implying an ending stocks-to-use ratio of 13.5 percent. For the 2015/16 Mexico sugar supply and use balance, imports are decreased by 20,092 MT to match the decrease in U.S. exports to Mexico. Mexico exports are projected at 1.122 million MT, a decrease of 28,606 from last month. Exports to the United States are projected at 1.112 million MT, based on changes made in the March 2016 WASDE for the United States as per the Countervailing Duty (CVD) Suspension Agreement of December 19, 2014 (“Target Quantity of U.S. Sugar Needs”).

 

LIVESTOCK, POULTRY, AND DAIRY: The 2016 forecast of total red meat and poultry production is raised from last month as higher forecast first-quarter broiler and turkey production more than offsets small reductions in beef and pork. First-quarter beef production is reduced on the pace of slaughter and lower carcass weights; pork production is reduced on slightly lighter carcass weights. Broiler and turkey production for the first quarter is raised as the pace of slaughter to date has been higher than expected.

The egg production forecast is raised on increased table egg production as the sector continues to rebuild following last year’s Highly Pathogenic Avian Influenza outbreaks. Historical poultry and egg production estimates are adjusted to reflect revisions in production data. Beef import and export forecasts are unchanged from last month. The pork export forecast is lowered from last month on recent trade data. The pork import forecast is raised on expectations of relatively large exportable supplies in the EU and continued strength of the U.S. dollar. Broiler export and turkey export forecasts are lowered on slower-than-expected sales in January. Annual cattle and hog prices for 2016 are unchanged from last month.

Broiler prices are lowered on current prices and expected higher production. The turkey price forecast is unchanged but the range is narrowed. Egg prices are reduced on higher forecast production. The milk production forecast for 2016 is lowered from last month as a smaller decline in the cowherd is more than offset by slower growth in milk per cow. Fat and skim-solids basis exports are reduced primarily on strong competition in international whey product markets, and exports of a number of other dairy products are facing increased competition. Imports are increased on both a fat and skim-solids basis. Continued strength of the U.S. dollar is expected to keep the United States as an attractive market for dairy products.

Expectations of a relatively wide spread between U.S. and international butter prices will support increased butterfat imports while cheese imports will likely benefit from continued demand strength. Whey product exports are also likely to be pressured by large world supplies. The butter price forecast is raised as demand remains firm. Cheese and nonfat dry milk (NDM) prices are reduced as supplies are expected to be large and in the case of NDM, international prices will remain under pressure from large global supplies. The whey price forecast is unchanged. The Class III price is lowered on the lower cheese price. The Class IV price is unchanged at the midpoint as the higher butter price offsets a lower NDM price; however, the range is narrowed. The all milk price forecast is lowered to $14.95 to $15.55 per cwt.

 

COTTON: The U.S. 2015/16 cotton supply and demand estimates are unchanged from last month. Marginal adjustments in harvested area and yield reflect NASS’s resurvey of the South Carolina crop. The marketing year average price received by producers is now estimated to range from 58.0 to 60.0 cents per pound, with the midpoint of 59.0 cents reduced from the February estimate due to declining market prices. With lower consumption partially offsetting lower production, global 2015/16 cotton ending stocks are revised down this month. Production is estimated lower in India and Pakistan, based on arrivals at gins, but higher in Australia. The 1.0-million-bale reduction in India’s crop reflects an early withdrawal of monsoon rainfall combined with pest damage in the northern states. Consumption is reduced mainly in Pakistan, based on lower available supplies. World ending stocks are now projected at 103.3 million bales. pproved by the Secretary of Agriculture and the Chairman of the World Agricultural 


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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. 

One of the major lessons that I have learned from all my years of experience is that knowledge is an important condition for the possibility of successful trading. Knowledge gives you a better chance to succeed by eliminating obvious mistakes: with it, you will never find yourself shamefully uttering, “If I only took the time to learn”.  
         
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