Moderating Ethanol Production Puts USDA’s Projection at Risk:
There’s a good chance the USDA will trim its 2016/17 corn use, for ethanol forecast. Ethanol is projected to rise 4.3% y/y to reach 5.45 billion bushels in the 2016/17 marketing season. US corn use, for ethanol in August will need to increase 6% y/y in order to reach the USDA’s target. Given that US ethanol production last week was even with the year ago level, this may be a tall order for the industry to fill. Traders can watch for the USDA’s August US corn balance sheet forecast and weekly ethanol data from EIA in Gro this week.
Brazil Likely To Increase Wheat Imports After Frost:
Brazil’s total wheat imports should easily exceed 7 million metric tons in the 2017/18 season, which would be the highest level since the 2012/13 season. A late season frost in Parana will cut the state’s wheat production by more than expected in 2017. Wheat output will likely decline to 2.82 million metric tons—6% lower than Deral’s prior forecast and 19% below year ago production. What’s more, the same frost will also cut Paraguay’s wheat exports to Brazil. While we have been expecting Brazil to import more high-protein wheat in 2017, there’s room for even more upside. Food companies can now track weekly US wheat export sales to Brazil along with Brazil’s monthly wheat imports by trade partner in Gro.
US Corn Acres Count Too This Season:
Delays in spring planting has made the number of US corn acres planted in 2017 more fluid. The USDA is now projecting that US growers planted 90.9 million acres of corn in 2017—1 million acres higher than its initial forecast in March. If their July forecast proves prescient, this would be the first time since 2012 that final planted acres were 1% or higher than the March forecast. A swing in acreage forecasts this week could impact corn futures, albeit likely not as much as yield revisions. After digesting the August WASDE report, Gro users should also monitor the USDA FAS’ initial estimate of prevent plant and failed corn acres on August 10. The report can help traders refine their estimate of final harvested acres and, concomitantly, production.