USDA’s Initial Crop Projections for 2018/19
Last week, USDA released its May World Agricultural Supply and Demand Estimates report, which presents the Department’s initial assessment of U.S. and world crop supply and demand prospects for 2018/19. USDA projects the United States will produce 522.7 million metric tons (mmt) of corn, soybeans, and wheat in 2018/19, down 3 percent from last year and the 3-year average.
Despite the drop in grain production, grain movements could increase slightly in the upcoming marketing year, as USDA forecasts grain exports to grow 2 percent and domestic consumption to remain stable compared to 2017/18. These projections will continue to be revised in the coming months.
As the report notes, “Due to spring planting still underway in the Northern Hemisphere, and being several months away in the Southern Hemisphere, these projections are highly tentative.”
Bulk Ocean Freight Rates Remain Relatively Stable
Ocean freight rates for shipping bulk grains have remained relatively stable for the past 6 weeks. As of the week ending May 10, the rate for shipping a metric ton (mt) of grain, from the U.S. Gulf to Japan was $44 and from the Pacific Northwest to Japan was $24.50. Over the past 6 weeks, rates have remained unchanged, fluctuating within a 1 to 2 percent range.
According to the May 10 Transportation and Export Report, by O’Neil Commodity Consulting, rates have remained soft because the much-anticipated improvement in cargo demand has not yet materialized.
Total Grain Inspections Down but Wheat and Soybeans Up
For the week ending May 10, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 2.6 million metric tons (mmt); down 5 percent from the previous week, up 9 percent from last year, and 32 percent above the 3-year average. Although wheat and soybean inspections increased 22 and 23 percent, respectively, from the previous week the increases could not offset the 19 percent decrease in corn inspections.
Grain inspections were down 11 percent from the past week in the Pacific (PNW) and down 1 percent in the Mississippi Gulf. Current outstanding (unshipped) export sales are up for soybeans but down for corn and wheat.
Snapshots by Sector
For the week ending May 3, unshipped balances of wheat, corn, and soybeans totaled 32.7 mmt, up 31 percent from the same time last year. Net weekly wheat export sales were .035 mmt, down 85 percent from the previous week. Net corn export sales were .696 mmt, down 27 percent from the previous week. Net soybean export sales totaled .354 mmt, down 15 percent from the previous week.
U.S. Class I railroads originated 25,100 grain carloads for the week ending May 5; up 5 percent from the previous week, 15 percent from last year, and 29 percent from the 3-year average. Average May shuttle secondary railcar bids/offers, per car, were $381 above tariff for the week ending May 10, up $190 from last week, and $544 higher than last year.
Average non-shuttle secondary railcar bids/offers, per car, were $700 above tariff, down $368 from last week, and $788 higher than last year.
For the week ending May 12, barge grain movements totaled 834,668 tons, 6 percent lower than the previous week and down 16 percent from the same period last year.
For the week ending May 12, 526 grain barges moved down river, 69 barges less than the previous week. There were 759 grain barges unloaded in New Orleans, 10 percent higher than the previous week.
For the week ending May 10, 36 ocean-going grain vessels were loaded in the Gulf, 29 percent more than the same period last year. Forty-nine vessels are expected to be loaded within the next 10 days, 6 percent less than the same period last year.
For the week ending May 10, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $44.00 per metric ton, down 1 percent from the previous week. The cost of shipping from the PNW to Japan was $24.50 per metric ton, up 2 percent from the previous week.
For the week ending May 14, the U.S. average diesel fuel price increased 7 cents from the previous week to $3.24 per gallon, 70 cents higher than the same week last year.