The International Grains Council said Thursday it expects global grain production to top 2.1 billion metric tons for the first time as it raised its production forecast amid favorable weather.
The IGC increased its monthly output forecast for 2016-17 to 2.102 million tons from 2.094 million tons, which would be a 5% increase year-over-year.
Forecasts of giant harvests in many grain-growing regions have led the IGC to raise its production forecast in nine of its last 10 reports.
"Australia accounts for much of this month's adjustment, including record harvests of wheat and barley, while prospects for maize (corn) improved in South America," the IGC said.
The IGC upgraded its corn production forecast to 1.049 billion tons from 1.045 billion tons and its soybean forecast by 2 million tons to 336 million tons. It left its wheat production forecast of 752 million tons and its rice forecast of 482 million tons unchanged.
It said the upward revision in expected production will be nearly matched by a corresponding hike in its consumption forecast. As a result, its forecast for year-end global grain inventories was raised by just 1 million tons to 508 million tons.
Looking further ahead, the IGC said growing conditions for 2017-18 winter crops that have already been planted in the northern hemisphere "remained mostly favorable."
Futures were a little higher and held while soybeans moved lower. Some corn against soybeans spreading was noted before the USDA Outlook Conference today. The trade anticipates reduced planted área this year and reduced production. However, USDA should show that there will still be plenty of corn for any takers. The overall chart picture remains price positive as the demand for ethanol production and for exports remains strong. Daily export sales announcements for this week have been over 500,000 tons. The trade fears that corn export demand will fade in the near term as the summer harvest moves forward in Brazil, but U.S. export demand can remain strong into the Summer as South America ran out of corn last year and will need to restock the pipelines before selling much into the world market. Argentina is seeing improved crop conditions due to recent rains and production ideas are holding. Conditions in Brazil are reported to be good, with the Winter crop getting planted in northern áreas as the soybeans get harvested. Very good progress is reported. USDA will issue its Outlook conference data on Thursday and Friday, and the estimates are expected to show reduced planted área to corn, perhaps in a significant way. However, ideas are that there will still be plenty of corn for sale in the world market due to the big supplies now and the potential for strong production even with the reduced área this year.
South Korea canceled a purchase of 136,000 tons of U.S. corn. We had said yesterday that this was a new sale.
Trends in corn are mixed. Support is at 367, 363, and 361 March, and resistance is at 373, 377, and 380 March. Trends in Oats are mixed. Support is at 251, 249, and 247 March, and resistance is at 260, 265, and 268 March.
Soybeans and products were lower again yesterday despite Brazilian Real strength. The Real is now above 32.5 cents after trading as low as 28 cents at the beginning of December. The harvest is proceeding rapidly in Brazil and ideas are that farmers there will be forced to sell sooner rather than later. They have been very quiet sellers so far. Private reports indicate that domestic prices are high enough to keep soybeans off the world market, but this might not last long once the selling starts. Argentine producers will start to harvest and should have a big crop that appears to be between 54 and 55 million tons. The Brazil production estimates are still high and are about 105 million tons or higher, with most now estimating production near or above 106 million tons. Argentine growing conditions have improved, but there are still losses. U.S. farmers are expected to sharply increase planted área for soybeans this year due to price spreads. soybeans, for now, offer the better chance of profits. Farmers were active sellers in US cash markets last week. USDA is expected to show a significant increase in planted área for soybeans in its Outlook conference estimates that will be released today and Friday.
Trends in soybeans are down with objectives of 1020, 1004, and 997 March. Support is at 1017, 1006, and 994 March, and resistance is at 1032, 1043, and 1050 March. Trends in Soybean Meal are mixed to down with objectives of 326.00 March. Support is at 331.00, 325.00, and 324.00 March, and resistance is at 341.00, 343.00, and 345.00 March. Trends in Soybean Oil are down with objectives of 3250, 3200, and 3110 March. Support is at 3240, 3220, and 3170 March, with resistance at 3310, 3340, and 3380 March.
Wheat was higher as the market started to prepare for the USDA Outlook Conference that kicks off today in Washington. The market hopes that USDA will show good demand and end stocks under 1.0 billion bushels. It also looks for less production overseas. Egypt bought 360,000 tons of wheat from East Europe and Russia again at firm prices. The Egyptian tender from last week also showed firm prices, but ideas are that prices will start to move lower in world markets sometime soon as the next northern crop starts to come to harvest and to market. Some beneficial precipitation is forecast for parts of the Great Plains later this week and any precipitation now should help with soil moisture once the crop breaks dormancy. However, temperatures will be warm this week and dormancy will break in at least some areas. Any cold snap after that could kill the crop in affected areas. It is only late February, so more cold temperatures are very possible. The charts show that Wheat trends are down for the short term. There will still be plenty of Wheat in the U.S. and in the world, but the definition of plenty keeps getting smaller and this usually means prices will not really be going much lower over time.
The southern Great Plains should get mostly dry conditions. Temperatures should be below normal today and tomorrow, then above normal. Northern areas should get dry weather. Temperatures should be mostly below normal through Thursday, then above normal. The Canadian Prairies should see mostly dry conditions. Temperatures will average mostly above normal.