Officials cut to a record low their forecast for US wheat sowings next year, amid a switch to other crops, with the estimate for soybean area hiked to a record high, while extra corn seedings keeping inventories large.
The US Department of Agriculture, in a preliminary release of revised long-term crop estimate, pegged US all-wheat sowings for the 2018 harvest at 45.0m acres - a figure which would represent the weakest on data going back to 1919.
The estimate, representing a drop of 1.0m acres year on year, also represents a marked downgrade from the USDA’s earlier expectations, with officials in February foreseeing growth in plantings for the 2018 crop, to 49.0m acres.
The revision follows a poor period for wheat prices, which have set a series of contract lows in Chicago’s futures market, most lately on Tuesday, weighed by ample supplies in exporting countries, and most notably Russia, where a strong harvest has given the country a huge supply of competitively-priced grain.
Agritel on Tuesday reported US cash prices of wheat at about “of $3.50 a bushel, so $128 a tonne or E107 a tonne”, a price level “way below production costs in the US”.
By contrast, Agrimoney sources have reported costs of production in Russia at $85-100 a tonne.
US farmers will divert the land lost to wheat to other crops, with planting estimates for 2018-19 raised for all the major alternatives, from corn to cotton – with farmers also seen bringing more land overall into output too than had been thought.
However, the biggest upgrade was to the estimate for soybean seedings, expected at a record 91.0m acres for next year – a gain of 800,000 acres year on year.
Previously, the USDA had forecast US soybean sowings next year at 85.0m acres.
Growers enhanced adoption of soybeans, seen driving US soybean stocks to 376m bushels at the close of 2018-19, was seen extending long-term too, with area in 2026-27 pegged at 91.5m acres - 6.5m acres above the previous forecast.
Large corn stocks
Again, some of this area looks like coming from wheat, for which the 2026-27 planting forecast, at 48.0m acres, was 1.5m acres below the USDA’s previous estimate.
Corn area, meanwhile, for 2018 was pegged at 91.0m acres, 1.5m acres above the previous estimate, with the area outlook longer-term seen a little more generous too.
Furthermore, the USDA, after the better-than-expected results of this year, raised its forecast for US the corn yield next year by 0.7 bushels per acre to 173.5 bushels, with improved estimates further ahead too.
Coupled with the extra area, the revisions drove production forecasts higher, and estimates for year-end inventories too, now seen remaining at 2.6m bushels or above for the next decade.
Previously, the USDA had forecast inventories easing back below 1.9m bushels by 2026-27.
While larger inventories are typically viewed as implying weaker price prospects, the USDA made only modest cuts to its outlook for farmgate values, which it now saw averaging $3.30 a bushel next season and $3.60 a bushel in 2026-27.
Previously, the forecast for 2018-19 had been $3.35 a bushel, and for 2026-27 at $3.70 a bushel.
For soybeans, the price outlook for next season was unchanged at $9.40 a bushel, and that for 2026-27 lowered by $0.25 to $9.55 a bushel.
However, for wheat, the USDA lifted its forecasts for farmgate prices, by $0.30 a bushel to $4.60 a bushel for next season, and by $0.10 to $5.10 a bushel for 2026-27.