The big 2015 crops got bigger in USDA’s November crop report

The report prompted an observation by the editors at Farm Futures, a sister publication to Delta Farm Press: “These are big crops the world doesn't want,” a tweet by Farm Futures said. “Best case scenario is to blow the bottom out, attract short covering, start the healing process.”

USDA’s big 2015 crops got bigger for the most part in its November Crop Production Report released today (Nov. 10). Corn and soybeans were up from less than 1 (corn) to 2 percent (soybeans) from the October forecast, while cotton was down less than 1 percent from October.

USDA’s estimates of the peanut and grain sorghum crops were both up from the 2014 figures while rice was down by almost 30 million hundredweight from 2014. The November report did not include wheat production.

Most of the details from the November report were bearish, although some of the sentiment might have already been discounted because of the old saying in the futures markets that big crops get bigger (as forecast by USDA’s Natural Agricultural Statistical Service) and small crops get smaller.

The report prompted an observation by the editors at Farm Futures, a sister publication to Delta Farm Press: “These are big crops the world doesn't want,” a tweet by Farm Futures said. “Best case scenario is to blow the bottom out, attract short covering, start the healing process.”

No one wants to hear that type of comment, the Farm Futures editors said “but given ongoing global macro and fundamental forces and other factors, it is likely mandatory that a serious price bottom be found before the field crop market prices can start a sustained grinding process to the upside. Once a serious bottom is in place then prices have the potential of two to three years of upside growth.”

“Through most of this year I have been anticipating a price bottom by November of this year,” said Bryce Knorr, senior grain market analyst for Farm Futures. “Recently I have been focused on an alternative scenario where field crop prices move sideways into the second half of next year before a serious bottom is in place and price relief emerges.”

University of Arkansas Webinar

Note: Knorr will be the presenter for a University of Arkansas System Division of Agriculture Webinar at 2 p.m. on Nov. 17. To register for the webinar, visit https://uaex.zoom.us/webinar/register/c8d2c425e761eebe34538d7d4481ef37.

“Last year at this time I said 2015 is going to be historically problematic for cotton, rice and grain prices or our key Delta field crops,” said Bobby Coats, professor of economics and agribusiness at the University of Arkansas, the moderator for the webinar series. “I advised all to be super conservative and live through 2015 and be glad 2016 has arrived.

“I am still studying how 2015 ends and potential 2016 price challenges. Without a dynamic price bottoming process near term (by the end of January) then 2016 has the potential to see prices move sideways the first half of 16 and climax to dangerously low levels in the second half. If we can put in a solid bottom near term then we can start thinking in terms of building price strength over the next 2-plus years.”

Dr. Coats says what “keeps me up a night is the inability of these markets to find a serious price bottom, but given the collective global macro forces, revealed fundamentals in today’s report, and other factors maybe-just-maybe a serious price bottom is on the horizon and the 2016 marketing period can provide very real price relief.

Tuesday’s USDA NASS report said corn production is forecast at 13.7 billion bushels, up less than 1 percent from the October forecast, but down 4 percent from last year’s record production.

“Based on conditions as of Nov. 1, yields are expected to average 169.3 bushels per acre, up 1.3 bushels from the October forecast but 1.7 bushels below the 2014 average,” said USDA-NASS. “If realized, this will be the second highest yield and third largest production on record for the United States. Area harvested for grain is forecast at 80.7 million acres, unchanged from the October forecast but down 3 percent from 2014.”

Record soybean production

Soybean production is forecast at a record 3.98 billion bushels, up 2 percent from October and up 1 percent from last year. Based on Nov. 1 conditions, yields are expected to average 48.3 bushels per acre, up 1.1 bushels from last month and up 0.8 bushel from last year. Area for harvest in the United States is forecast at 82.4 million acres, unchanged from last month.

Meanwhile, cotton production is forecast at 13.3 million 480-pound bales, down less than 1 percent from last month and down 19 percent from last year. Yield is expected to average 782 pounds per harvested acre, down 56 pounds from last year.

Upland cotton production is forecast at 12.8 million 480-pound bales, down 19 percent from 2014. Pima cotton production, forecast at 451,000 bales, was carried forward from last month.

U.S. rice production is forecast by USDA NASS at 190.8 million hundredweight, up 3 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.

The Agriculture Department said yields are raised for all states except for Texas and Arkansas where yields were lowered in the former and left 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 hundredweight and combined medium- and short-grain production at 58.4 million. The all rice import forecast is unchanged at 25.5 million.

Rice domestic, residual use rose

Rice domestic and residual use is raised 2.0 million hundredweight to 127.0 million, 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 season-average farm price for all types of rice 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 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.

USDA said grain sorghum production could rise from 2014’s 432.57 million bushels to 593.81 million due to increased acreage due to the premium offered for grain sorghum over corn last winter.

Peanut production is expected to rise from 5.18 billion pounds to 6.17 billion after farmers increased acreage significantly due to the perception the 2014 farm bill was leading them to do so.

To see the November 2015 Crop Production Report, click on http://www.usda.gov/nass/PUBS/TODAYRPT/crop1115.pdf.

 

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