(Wall Street Journal) – U.S. farmers likely will harvest the second-largest corn crop on record this year, causing grain supplies to swell, according to analysts surveyed by The Wall Street Journal ahead of a closely watched crop report.
Analysts widely expect the U.S. Agriculture Department in a monthly supply-and-demand report on Tuesday to forecast domestic corn production this year at 14.151 billion bushels, up from 2015 and just shy of the 2014 record, according to the median forecast of analysts polled. Soybean output is pegged at 3.788 billion bushels, down from last year’s record of 3.929 billion bushels.
Tuesday’s report marks the government’s first estimates for the new crop year and assumes average weather. It is due to be released at noon ET in Washington, D.C. The projections come as adverse weather in South America recently has threatened corn and soybean crops there, putting upcoming U.S. production in the spotlight.
“This year’s corn crop has gone in the ground early and fast, which equates to better growing conditions and bigger yields,” said Don Roose, president of U.S. Commodities, a brokerage in West Des Moines, Iowa.
U.S. farmers already are expected to sow about 6% more corn acres this year than last. According to Mr. Roose, the quick pace of planting plus generous moisture seen across much of the Farm Belt this spring could also help protect plants from any hot, dry weather that descends upon the U.S. Midwest later in the growing season.
Near-record corn production will boost U.S. stockpiles at the end of the 2016-17 season, which begins Sept. 1, to 2.228 billion bushels, the highest in nearly three decades, the analysts forecast. That figure is up 22% from projected inventories of 1.825 billion bushels in 2015-16. The amount of soybeans in storage will decline slightly, to 427 million bushels at the end of the 2016-17 season from the outlook for 428 million bushels for the current season.
Global corn stockpiles at the end of the 2016-17 season are expected to rise to 210.4 million metric tons from 206.2 million in 2015-16, according to the survey. World soybean inventories will decline to 73.4 million tons at the end of the 2016-17 season from 76.1 million this season, the analysts said.
The government’s estimates for corn and soybean production in South America in 2016 may drop, according to the survey. Analysts expect the USDA to trim Brazil’s corn production to 80.2 million metric tons from last month’s 84 million, while soybean output is seen at 99.1 million tons versus 100 million forecast by the government in April, the analysts said.
Argentine farmers likely will collect 55.5 million metric tons of soybeans, down from the 59 million projected in April, while corn production is pegged at 27.4 million tons, lower than the USDA’s previous estimate of 28 million, analysts forecast.
The USDA on Tuesday will also estimate wheat production for the 2016-17 season that ends next May. U.S. wheat output will likely drop to 1.975 billion bushels, down from 2.052 billion in 2015-16 amid lower U.S. plantings, according to The Wall Street Journal survey.
Farmers likely will harvest 816 million bushels of the most commonly used wheat, known as hard-red winter wheat, according to an average of analysts’ estimates. That wheat type is sown mostly in the Great Plains and used to bake bread.
Output of soft-red winter wheat, used in cookies and cakes, and grown in the eastern Midwest, will be pegged at 360 million bushels, and white winter wheat, grown in the Pacific Northwest, will likely total 200 million bushels, analysts said.
Despite lower production, domestic wheat reserves at the end of the 2016-17 season also could rise to a nearly thirty-year high amid sluggish exports of the grain, the analysts said. Abundant global grain reserves and the strong U.S. dollar have recently dampened demand for U.S. wheat supplies.
“The bottom line is, keep your eye on the sky and on the dollar,” said Mr. Roose.
