Corn crop
The high production levels have prices well below 2012-13 averages.

A generally good growing season followed by favorable harvest conditions for fall crops have resulted in ample U.S. grain supplies, with some crops following record production last year. The picture is similar globally, with no shortage of corn, soybeans or wheat to compete with U.S. exports. At the same time, the trade is keeping a wary eye out for effects of El Niño, which is tending to limit declines of some crop prices.

The U.S. Department of Agriculture on Oct. 9 estimated U.S. 2015 corn production at 13,585 million bus, the third highest ever after record outturn of 14,216 million bus in 2014 and 13,829 million bus in 2013. Global corn production was forecast at 972.6 million tonnes, down 4% from 2014-15. U.S. corn exports were forecast at 1,850 million bus, down 1% from last year and equal to a 38.5% share of global exports. The United States remains by far the largest exporter of corn. The U.S.D.A. raised slightly from September its 2015-16 forecast average price for corn paid to farmers to a range of $3.50 to $4.10 a bu, which compared with $3.70 a bu last year and the record high of $6.89 a bu in 2012-13.

U.S. soybean production was estimated at 3,888 million bus, the second highest on record after 3,927 million bus last year. World soybean production in 2015-16, though, was forecast at a record 320.49 million tonnes, up slightly from last year largely due to record output in Brazil, forecast at 100 million tonnes, up 4% from 2014-15. Brazil soybean production is second only to the United States’ 105.81 million tonnes. But U.S. soybean exports at 1,675 million bus were forecast to drop 9% from last year mainly on increased foreign competition. The United States’ share of global soybean exports is 36%, second to Brazil’s 44% share. The U.S.D.A. forecast the average soybean price paid to farmers to range between $8.40 and $9.90 a bu in 2015-16, compared with $10.10 a bu last year and the record $14.40 a bu paid in 2012-13.

Grain forecast chart
Forecast share of 2015-16 global exports.

While U.S. wheat production at 2,052 million bus was far from any record in 2015 (the largest U.S. wheat crop was 2,785 million bus in 1981), global wheat production was forecast at 733 million tonnes, up 1% from 2014-15 and record high for the third consecutive year. The average wheat price paid to U.S. farmers was projected in a range of $4.75 to $5.25 a bu in 2015-16, down from $5.99 last year and well below the record $7.77 a bu in 2012-13. Though the average U.S. wheat price forecast was the lowest in six years, U.S. prices still are high relative to the world market, which has limited export prospects. The U.S.D.A. forecast U.S. wheat exports in 2015-16 at 850 million bus, down just slightly from last year but about 20% below the five-year average. The U.S. share of world wheat exports was forecast at about 14%, behind the European Union at 21% and Russia at 15%.

While U.S. grain and oilseed prices are well below 2012-13 record high averages, domestic and global price declines for grains and several other commodities have been pared, and in some cases have rallied from multi-year lows, by potential production declines caused by the El Niño system, which is said to be the strongest in nearly 20 years. Australia’s weather bureau last week noted that the Indian Ocean’s Dipole (equivalent to the Pacific Ocean’s El Niño) was the strongest since 2006 and indicated dry weather in Australia, a major grain, beef and sugar exporter.

“In the past, non-fuel commodity prices have risen by 5.3% on average in the 12 months following the announcement of an El Niño event, according to an International Monetary Fund working paper,” The Wall Street Journal said Oct. 13. While El Niño may have less of an impact on U.S. crop production than in other parts of the world, its impact on prices will not go unnoticed.