McNew: International corn to test market

Associate Editor

ANNAPOLIS, Md. (Jan. 3, 2017) — International grain markets are becoming increasingly competitive as countries boost production of corn, soybeans and wheat, a markets analyst said last month.
The United States will face more competition this year as several countries push more corn into the world market and global stocks continue to rise, said Kevin McNew, president of GeoGrain, a Bozeman, Mont.-based grain market analysis company.
McNew was speaking at the University of Maryland’s 2016 Agricultural Outlook and Policy Conference on Dec. 14.
Brazil’s corn crop is projected to expand by 30 percent as it recovers from a 2015 drought that helped American exports, he said.
Argentina may also expand by 10 percent. China is reversing 15 years of government corn policy, exporting and living off existing degraded stocks while halting farm subsidies.
“There’s going to be a lot more competition in the second half of the market year,” McNew said. “I think it presents a very unfavorable market for us in the coming year.”
Meanwhile, U.S. corn yields are increasing.
They jumped from 168 bushels per acre in 2014-15 to 175 bushels in 2016-17. Soybean yields also increased from 48 bushels per acre in 2015-16 to about 53 bushels in 2016-17, he said.
U.S. corn stocks are expected to jump from 1.7 billion bushels in 2014-15 or 12.7 percent relative to corn use to 2.4 billion bushels in 2016-17 or about 16 percent relative to use.
Soybean stocks will jump from 197 million bushels in 2015-16 or 5 percent relative to use to 480 million bushels or about 12 percent relative to use.
Gloomy trends in the wheat market continue. U.S. wheat stocks, projected at 1.1 billion bushels in 2016-17, will be at about 50 percent relative to use, McNew said.
“In any discussion of wheat, the only question is, ‘Is there a drought somewhere?’” he said. “It’s only a drought that saves the wheat market.”
McNew said the United States must limit wheat production.
“I would love if Maryland farmers got that message because they all double-crop it,” he said.
Farther out, China’s middle class is exploding and has gone from consuming very low amounts of pork and chicken to very high amounts. More meat consumption requires more grain production, he said, but that production also produces environmental consequences.
McNew cited the USDA’s 2015 dietary guidelines report that said a diet higher in plant-based food and lower in animal-based foods is healthier and associated with a lesser environmental impact than the current, average American diet.
About 2 billion of Earth’s 7 billion people are overweight or obese, he said.
There is a strong link between chronic disease and obesity, and the population is projected to be 9 billion by 2050.
“The environmental consequences of agriculture will continue to be addressed and need to be addressed,” he said.