Ballooning corn, soya crops will raise stakes for US demand

The US government clings to a relatively optimistic view on domestically grown soyabeans for the long term, though the prognosis for corn is less encouraging. Soyabeans, however, could find themselves in the same boat as corn if this year's projected soya demand proves too lofty.
The US Department of Agriculture on Tuesday published key tables from its annual baseline projections for US agriculture. The full report - which covers the next 10 years - will not be available until February, but the tables give market watchers a first look at balance sheets for 2018/19 and beyond. One of the main takeaways from Tuesday's tables is the shift in focus toward soyabeans, as both supply and demand elements received a significant boost over last year's outlook. The uptick in supply, in particular, was much needed given that year-ago planting assumptions sorely missed the mark in 2017.
Heavier demand - led almost entirely by a lift in exports - is set to balance the additional supply, as next year's total soyabean use is slated to be 7 percent larger than the year-ago forecast for 2018/19. The reliance on exports could be dangerous, though.
If 2017/18 exports fall short of the record 2.25 billion-bushel forecast - which many analysts fear might happen - soyabeans might end up going the way of corn, where supply overpowers demand and ultimately, prices. Oversupply continues to be the theme in the corn market as the ethanol-led rise in use is not expected to outweigh larger crops next year and beyond. Future area and yield targets are even larger than the year-ago predictions.
This means that without any global supply shock, the 2017/18 carryout of 2.487 billion bushels - a 30-year high - would be the smallest domestic corn stockpile for at least another decade. That contrasts with the year-ago outlook which called for more evenly matched increases in both supply and use, as well as a shrinking trend in carryout over the next 10 years. The planted area and yield numbers for the 2018/19 corn and soyabean crops are the most immediately useful numbers because they are a good indicator of what USDA's first official forecast is likely to reflect.
Soyabean plantings are set to reach a new record of 91 million acres in 2018, topping the 90.2 million high from earlier this year. The agency sees US farmers maintaining bean acreage in the low 90 million-acres range over the next decade.