USDA Reports Summary

By Katie Micik
DTN Markets Editor

WASHINGTON (DTN) -- USDA's November Crop Production report stayed true to the old adage that big crops get bigger. And, in the case of soybeans and sorghum, USDA's forecasts came in above the range of pre-report expectations.

USDA is now calling for a record 3.98 billion bushel soybean harvest, a 99 million bushel increase in its corn production forecast and a 4% increase in its sorghum crop production estimate from last month.

USDA's World Agricultural Supply and Demand (WASDE) report pegged corn ending stocks at 1.76 billion bushels, up 199 mb from last month and above the range of trade expectations. USDA foresees large grain sorghum supplies displacing some corn for ethanol use. It also cut its export forecast.

Global corn stockpiles swelled by 24 million metric tons to 211.9 mmt, well above pre-report expectations. USDA made multi-year downward revisions to China's corn feeding that accounted for 18.8 mmt of the surprise change.

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Crop Production: http://www.nass.usda.gov/…

World Agricultural Supply and Demand Estimates (WASDE): http://www.usda.gov/…

CROP PRODUCTION

On soybeans, USDA bumped its yield forecast up 1.1 bushels per acre from last month to 48.3 bpa. Total production, 3.98 bb, would be a new record. Harvested acreage was left unchanged from last month at 82.4 million acres. USDA's yield and production estimates for soybeans were above the range of pre-report expectations.

Farmers are expected to harvest 13.65 bb of corn, 99 million bushels more than forecasted last month, with a national average yield of 169.3 bpa. That's 1.3 bpa higher than last month's estimate, and if it's realized, it will be the second highest average yield and the third largest production in history. Both figures were toward the high end of trade estimates. Harvested acreage was also left unchanged from last month at 80.7 ma.

Increases to sorghum production far outpaced what analysts expected. USDA expects farmers will harvest 594 mb, a 20 mb increase from October's forecast and 161 mb more than last year. That's 12 mb higher than the top end of analysts' estimates.

The national average sorghum yield was forecast to be a record at 77.7 bpa, 2.7 bpa higher than last month and 10.1 bpa higher than last year. Record yields are expected in Kansas, Nebraska and South Dakota.

WASDE

CORN

In addition to USDA's 99 mb boost in production, USDA trimmed its forecast for corn use for ethanol by 75 mb, cut its forecast for exports by 50 mb and increased domestic feed and residual use by 25 mb. The net result was a 100 mb cut to overall use.

"The reduced outlook for corn use for ethanol is driven by significant adjustments to the 2015/16 sorghum balance sheet this month," USDA stated. "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."

The combination of larger production and less use increased corn ending stocks for 2015-16 by 199 mb to 1.76 bb. The ending stocks-to-use ratio climbed to 12.9% from last month's 11.3% estimate.

USDA also lowered its range of farm gate prices to $3.35 per bushel to $3.95 per bushel.

Globally, USDA's decision to cut China's corn use for feed from the 2013-14 crop year through 2015-16 caused a large jump in its forecast for global ending stocks. It's estimated increased to 211.91 mmt from last month's 187.8 mmt estimate.

USDA left Chinese corn production unchanged, but increased Brazil's forecast by 1.5 mmt to 81.5 mmt.

The global ending stocks-to-use ratio also climbed to 21.8% from 19.2% last month.

SOYBEANS

USDA increased its production forecast by 94 mb, but it also increased soybean crush by 10 mb, exports by 40 mb and residual use by 3 mb. The result was a 40 mb net increase in ending stocks to 465 mb, which is toward the high end of pre-report estimates.

The domestic soybean stocks-to-use ratio increased from 11.5% last month to 12.4%. USDA also lowered the range of average farm gate prices to $8.15 per bushels to $9.65 per bushel.

Globally, USDA forecast ending stocks at 82.9 mmt, down its October forecast of 85.1 mmt. USDA sees China's demand for soybeans increasing by 1.5 mmt to 80.5 mmt, drawing on supplies in Brazil, Argentina and U.S.

The global ending stocks-to-use ratio declined by nearly one percentage point to 26.5%.

WHEAT

USDA made very few changes, comparatively, to its wheat supply and demand forecast. It trimmed its export forecast by 50 mb, resulting in an equivalent increase in its ending stocks forecast. Ending stocks are now estimated at 911 mb, which is near the high end of pre-report estimates.

The ending stocks-to-use ratio climbed to 45.1%, and USDA tightened the forecast range of farm gate prices to $4.80 per bushel and $5.20 per bushel.

Globally, USDA trimmed its ending stocks estimate by 1.2 mmt to 227.3 mmt. While USDA cut Australia's production by 1 mmt, it increased European Union production by 2 mmt. The ending stocks-to-use ratio declined slightly to 31.7%.

ANALYSIS

On the domestic side, USDA's November WASDE estimate of U.S. corn ending stocks for 2015-16 was 1.760 billion bushels, more than expected and based on 13.654 billion bushels of estimated production with a yield of 169.3 bushels an acre. The 2014-15 estimate of U.S. ending stocks remained at 1.731 billion bushels. "Tuesday's report should be viewed as bearish for corn," said DTN Analyst Todd Hultman.

USDA's estimate of U.S. soybean ending for 2015-16 was 465 million bushels, more than expected and is based on 3.981 billion bushels of production and a yield of 48.3 bushels an acre. The 2014-15 estimate of ending stocks remained at 191 million bushels. "Tuesday's report should be viewed as bearish for soybeans," Hultman said.

USDA's estimate of U.S. ending wheat stocks for 2015-16 was 911 million bushels, based on 2.052 billion bushels of production and is more than expected. "Tuesday's U.S. report should be viewed as bearish for wheat," Hultman said.

On the global side, USDA's estimate of world ending corn stocks for 2015-16 was increased from 187.83 mmt to 211.91 mmt and is much more than expected. USDA's world ending soybean stocks estimate for 2015-16 was reduced from 85.14 mmt to 82.86 mmt and is less than expected. USDA's estimate of world ending wheat stocks for 2015-16 was reduced from 228.49 mmt to 227.30 mmt and is slightly than expected.

"Tuesday's world estimates from USDA are bearish for corn, but bullish for soybeans and neutral for wheat," Hultman said.

U.S. CROP PRODUCTION (Million Bushels) 2015-16
	Nov	Avg	High	Low	Oct	2014-15
Corn	13,654	13,556	13,673	13,334	13,555	14,216
Soybeans	3,981	3,912	3,955	3,818	3,888	3,927
Grain Sorghum	594	575	582	569	574	433
U.S. AVERAGE YIELD (Bushels Per Acre) 2015-16
	Nov	Avg	High	Low	Oct	2014-15
Corn	169.3	168.0	169.6	164.2	168.0	171.0
Soybeans	48.3	47.5	48.0	46.2	47.2	47.5
U.S. HARVESTED ACRES (Million) 2015-16
million acres	Nov	Avg	High	Low	Oct	2014-15
Corn	80.7	80.7	81.4	80.5	80.7	83.1
Soybeans	82.4	82.4	83.2	82.2	82.4	82.6
U.S. ENDING STOCKS (Million Bushels) 2015-16
	Nov	Avg	High	Low	Oct	2014-15
Corn	1,760	1,587	1,702	1,314	1,561	1,731
Soybeans	465	429	476	353	425	191
Grain Sorghum	58	43	48	38	42	18
Wheat	911	866	914	761	861	753
WORLD ENDING STOCKS (Million Metric Tons) 2015-16
	Nov	Avg	High	Low	Oct	2014-15
Corn	211.9	188.7	190.9	184.9	187.8	196.0
Soybeans	82.9	85.1	86.7	82.7	85.1	78.0
Wheat	227.3	227.9	231.5	222.5	228.5	212.1
WORLD PRODUCTION (Million Metric Tons)
		2015-16			2014-15
		Nov	Oct		Nov	Oct
Australian wheat		26.0	27.0		23.7	23.7
European Union wheat		157.3	155.3		156.5	156.5
China corn		225.0	225.0		215.7	215.7
Brazil corn		81.5	80.0		85.0	85.0
Argentine soybeans		57.0	57.0		60.8	60.8
Brazil soybeans		100.0	100.0		96.2	96.2

(AG)

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