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WASDE Report for 4/12/16


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WHEAT: U.S. wheat endings stocks for 2015/16 are projected 10 million bushels higher

on reduced feed and residual use. At 976 million bushels, these would be the largest

ending stocks since 1987. The reduced feed and residual use reflects lower

disappearance during the December-February and September-November quarters as

indicated by March 1 stocks and revised December 1 stocks, both from the March 31

Grain Stocks report. The projected season-average farm price is lowered $0.10 on the

high end to $4.90 to $5.00.


Global 2015/16 wheat supplies are raised 1.0 million tons primarily on increased

production, which is a record 733.1 million tons. EU production is raised 1.5 million tons

to a record 160.0 million, and Argentina is raised 0.3 million tons to 11.3 million, both on

updated government data. Partially offsetting are a 0.6-million-ton reduction for Ethiopia,

and a 0.4-million-ton reduction for Pakistan. World exports are raised 0.4 million tons to

163.1 million. World wheat consumption for 2015/16 is lowered 0.7 million tons on both

reduced feed and food use. With supplies rising and use declining, global ending stocks

are raised 1.7 million tons to 239.3 million, and remain record large.


COARSE GRAINS: U.S. feed grain ending stocks for 2015/16 are projected higher with

increases for corn, barley, and oats based on indicated disappearance as reported in the

March 31 Grain Stocks and adjustments to seed use based on intended acreage from

Prospective Plantings. Corn feed and residual use is projected 50 million bushels lower

reflecting indicated disappearance through the first half of the marketing year. Corn use

in ethanol production is projected 25 million bushels higher on a stronger-than-expected

pace of weekly ethanol production through March as reported by the Energy Information

Administration. Projected corn ending stocks are raised 25 million bushels. The

projected season-average farm price for corn is lowered 5 cents at the midpoint to $3.55

per bushel, with the range lowered 10 cents on the high end.


Offsetting usage changes are made for 2015/16 U.S. sorghum this month. Projected

feed and residual use is lowered 15 million bushels based on the March 1 stocks.

Sorghum food, seed, and industrial use is projected 25 million bushels higher based on

robust use of sorghum to make ethanol during February as indicated in the latest Grain

Crushings and Co-Products Production report. Projected exports are lowered 10 million

bushels as sales have declined sharply in recent weeks. The sorghum farm price range

is projected 10 cents lower at the midpoint to $3.20 per bushel as discounts to corn

remain large in the latest data.


Global coarse grain supplies for 2015/16 are projected 0.3 million tons higher with a

number of mostly offsetting changes. Corn production is raised 1.0 million tons for

Argentina, as timely rain during February and March was beneficial following some

dryness and heat during January. Barley production for Argentina is raised 0.6 million

tons on greater area and better-than-expected yields. Argentina corn production is also

revised 1.7 million tons higher for 2014/15. Mali corn production for 2015/16 is 0.6 million

tons higher following favorable summer rain over the main production areas. Sorghum

output is lowered 3.1 million tons for Sudan and 1.2 million tons for Ethiopia, as El Niño

conditions over the past year reduced rain in key growing areas. There are also a number

of other smaller changes to coarse grains production in several other countries of SubSaharan

Africa. Elsewhere, corn production is raised 0.5 million tons for both Mexico and

Serbia. Production is raised for Mexico reflecting the latest government statistics which

indicate higher winter planted area in Sinaloa. The change for Serbia is based on the

latest government revisions for the crop that was grown last summer.


Global coarse grain exports for 2015/16 are raised 3.5 million tons as increases for corn

and barley more than offset a small reduction for sorghum. Corn exports are raised 2.0

million tons for Argentina, 0.3 million tons each for the EU and Russia, and 0.2 million

tons for Ukraine. Vietnam corn imports are raised 2.0 million tons, reflecting trade data

and updated estimates for feed and residual disappearance. Corn imports for the EU are

lowered 1.0 million tons, on a slowing import license pace and large, competitively priced

wheat supplies, which are expected to support greater domestic wheat feeding. Corn

consumption for Japan is revised lower for several years reflecting official government

statistics. Barley exports are raised for the EU and Argentina with higher imports for

Saudi Arabia and Iran. Sorghum imports are lowered for China but raised for Mexico.


China corn feeding is raised, offsetting a decline in wheat as internal market prices are

expected to favor corn. China corn ending stocks for 2015/16 are lowered 2.0 million

tons, but the reduction is more than offset by larger stocks in Japan, the United States,

Vietnam, Serbia, and Argentina. Global corn ending stocks are projected 1.9 million tons

higher.


RICE: U.S. 2015/16 rice supplies are lowered 0.5 million cwt on lower long-grain

imports. Long-grain ending stocks are lowered 0.5 million cwt to 22.5 million. All rice

ending stocks are now 43.4 million cwt. The all rice and long-grain season-average

prices are each lowered $0.30 per cwt at the midpoint to $12.30 to $12.70 and $10.80 to

$11.20, respectively. Medium- and short-grain prices are also down with the California

price lowered $0.50 per cwt at the midpoint and the Other States price lowered $0.20 per

cwt at the midpoint.


Global rice supplies for 2015/16 are lowered 0.5 million tons, primarily on reduced

production. Brazil and Pakistan production are lowered 0.3 million tons and 0.2 million

tons, respectively, both on updated government statistics. Global trade and domestic use

projections are both lowered fractionally. Global ending stocks are lowered 0.3 million

tons to 90.2 million.


OILSEEDS: U.S. soybean supply and use changes for 2015/16 include higher exports,

lower seed use, and lower ending stocks. Soybean exports are increased 15 million

bushels to 1,705 million reflecting stronger global soybean imports led by China and

several other countries including Iran, Bangladesh, and Mexico. Seed use is reduced

slightly in line with plantings indicated in the March 31 Prospective Plantings report.

Soybean ending stocks are projected at 445 million bushels, down 15 million from last

month. Soybean crush and balance sheets for soybean meal and oil are unchanged.

Forecast price ranges for soybeans and products are narrowed this month with midpoints

all unchanged.


Global oilseed production for 2015/16 is projected at 527.0 million tons, marginally higher

than last month, with small, mostly offsetting changes in foreign production. Global

soybean production is virtually unchanged at 320.2 million tons as a projected boost to

Argentina production offsets a decline for India. Argentina soybean production is

projected at 59.0 million tons, up 0.5 million, as a higher forecast yield more than offsets

a decline to harvested area. 


India soybean production is lowered 0.5 million tons to 7.5

million on reduced harvested area and yield. Yields are estimated at just 0.66 tons per

hectare, reflecting excessive moisture in Madhya Pradesh and erratic rainfall in

Maharashtra. Other changes include reduced soybean production for China, and

increased rapeseed production for the EU and China. China sunflowerseed production is

also raised, but more than offset by lower forecasts for the EU, Brazil, and Argentina. For

2014/15, global soybean production is raised 1.0 million tons to 319.5 million on a larger

estimate for Brazil. Brazil 2014/15 soybean production is boosted as marketing year

trade and crush data indicate a larger production estimate.


Global oilseed trade for 2015/16 is projected at 150.8 million tons, up 1.4 million mainly

reflecting increased soybean trade. Increased exports projected for Brazil and the United

States are only partly offset by reductions for Argentina and India. Soybean imports are

raised 1.0 million tons to 83.0 million for China reflecting stronger-than-expected imports

from Brazil. Higher soybean imports are projected for several other countries including

Iran, Japan, Bangladesh, and Mexico. Partly offsetting are soybean import reductions for

Vietnam, Egypt, Venezuela, and Chile. Global soybean ending stocks are projected at

79.0 million tons, up 0.2 million with gains for Argentina and China mostly offset with

reductions for Brazil and the United States.


SUGAR: U.S. sugar production for 2015/16 is decreased by 35,418 short tons, raw

value (STRV) due to lower expected sucrose recovery from both sugarbeet slicing and

from sugarcane milling in Florida. Imports are increased by 8,646 STRV, mostly due to

more calendar year 2016 shipments under Free Trade Agreements occurring in the fiscal

year 2015/16 than originally anticipated. Imports from Mexico are lowered slightly on the

basis of a rounding adjustment. There are no use changes. Ending stocks for 2015/16

are projected at 1.619 million STRV, implying a stocks-to-use ratio of 13.3 percent.

Mexico sugar deliveries for 2015/16 human consumption are lowered by 25,241 metric

tons (MT) to 4.319 million. Exports are reduced slightly due to a rounding adjustment.

Ending stocks are projected at 1.160 million MT implying a stocks-to-consumption ratio of

26.85 percent.


LIVESTOCK, POULTRY, AND DAIRY: The 2016 forecast of total red meat and poultry

production is raised from last month as higher expected cattle slaughter and heavier

carcass weights more than offset a lower pork production forecast. The Quarterly Hogs

and Pigs report, released March 25, estimated that growth in pigs per litter in the first

quarter was slower than expected and that producers expected to farrow fewer sows in

March-May than previously intended. Coupled with slower-than-expected first quarter

slaughter, forecast pork production is reduced. No change is made to broiler and turkey

production.


The beef import forecast is raised and the export is reduced from last month based on

recent trade data. The strength of the U.S. dollar continues to make the United States an

attractive market for imports and constrains exports. Pork imports are raised on the

strength of the dollar, but improving demand in several importing countries is providing

support for increased exports. The broiler export forecast is unchanged from last month,

but turkey exports are reduced on a slower pace of export recovery.

The cattle price forecast is reduced from last month on relatively weak demand and

larger expected fed cattle supplies. Hog prices are lowered on weaker demand. No

change is made to 2016 broiler and turkey prices. Egg prices are reduced on weaker

demand.


The milk production forecast is increased from last month on a slower reduction in the

cow inventory and slightly faster growth in milk per cow. Fat basis exports are raised on

strong exports of butterfat-containing products, but strong imports of butterfat and cheese

supported an increase in the fat basis import forecast. Skim-solids exports and imports

are lowered on the pace of trade to date.


The butter and nonfat dry milk (NDM) price forecast are reduced from last month on

relatively large supplies and continued pressure from weak international prices. Cheese

and whey prices are unchanged at the midpoint, but the range is narrowed for cheese.

With no change made to cheese and whey, the Class III price is unchanged at the

midpoint. The Class IV price is lowered on lower butter and NDM prices. The annual all

milk price forecast is unchanged at the midpoint as stronger first-half prices are offset by

lower second-half price forecasts.


COTTON: The U.S. cotton 2015/16 supply and demand forecasts show only marginal

changes from last month. Production is decreased 73,000 bales to reflect USDA’s March

Cotton Ginnings report. Domestic mill use and exports are unchanged. With small

adjustments to imports and the “unaccounted” residual, ending stocks are lowered

100,000 bales to 3.5 million. The marketing year average price received by producers is 

WASDE-552-5

expected to fall between 58.0 and 59.0 cents per pound, a reduction of 1.0 cent at the

upper end of the range.


The world cotton 2015/16 supply and demand forecasts include lower estimated

beginning stocks and production combined with slightly higher consumption, resulting in a

1.1-million-bale reduction in ending stocks. Beginning stocks are lowered about 300,000

bales, mainly for Greece and Malaysia on historical revisions, partly offset by an increase

for Brazil. World production is reduced 400,000 bales, with reductions in Côte d’Ivoire,

Mali, and Brazil. Consumption is raised for China and Pakistan, but is lowered for

Indonesia, Bangladesh, and Turkey. World stocks are now projected at 102.2 million

bales.

 

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About the author


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”.  
         
I want to save you from such regrets by teaching you where the danger is, what it looks like, and how to go around it, while still keeping an eye on your destination of success. In short, I will teach you how to combat error with knowledge.
       
My mission is to educate you, giving you my 45 years experience, wisdom, and knowledge from which you will then be able to use and benefit from at will.

I know what will help you make money, and I know what will insure failure. Use my services and prevent, “If I only knew”.  
  

Howard Tyllas

Futures trading involves the substantial risk of loss and may not be suitable for all investors. Past performance does not mean future results.

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