Big report day for USDA

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Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports: WASDE, Annual Crop Production, and Grain Stocks.

As the market reaction shows, today’s release was a set of favorable reports. In the Annual Crop Production report, USDA ended up reducing 2020 crop plantings by roughly 200,000 acres and the national corn yield estimate by 3.8 bushels per acre. That reduced 2020 estimated corn production by 325 million bushels. Soybeans saw a similar drop, with the national yield estimate down 0.5 bushels per acre and estimated production lowered 35 million bushels. Looking at the state-level data, the corn production losses covered most of the Corn Belt, from the Dakotas to Ohio, with only the southern states (Kansas and Missouri) seeing an increase in the yield estimates. Iowa’s corn yield estimate was lowered 6 bushels, to 178 bushels per acre. For soybeans, the state-level data showed more variability, with Illinois, Missouri, and North Dakota gaining in yield, while most other states declined. Iowa’s soybean yield estimate was lowered by a bushel, to 53 bushels per acre.

The December crop stock levels came in at or below expectations. While USDA’s estimate of soybean stock levels landed well within the trade range of estimates, the corn stocks were estimated at least 250 million bushels below any of the published trade guesses. Crop usage for feed and exports has continued to chew through this year’s crop quickly.

Turning to the WASDE report, USDA bumped up 2019/20 corn feed usage by roughly 75 million bushels, which lowered 2019/20 carryout. For 2020/21, plugging in the 325 million drop in production (from the Annual Crop Production report), total supplies were lowered by 400 million bushels. To partially offset, USDA lowered expected feed (down 50 million), export (down 100 million), and ethanol (down 100 million) usage, based on higher expected prices. But that still implies a 150 million bushel decline in 2020/21 ending stock, dropping the estimated stocks to 1.55 billion, which would be the lowest level we’ve seen in several years. With all of these corn changes, USDA raised its 2020/21 season-average price estimate by 20 cents, to $4.20 per bushel. The changes to the soybean balance sheet mainly concentrated on the 2020/21 outlook. Given the smaller crop, USDA raised soybean imports by 20 million bushels, partially offsetting the yield loss. But soybean usage continues to expand. Domestic crush was raised 5 million bushels.  Exports were raised 30 million bushels. The only soybean usage category that declined was seed and residual, by 13 million. Overall, 2020/21 soybean ending stocks were lowered 35 million bushels, to 140 million bushels in total, continuing the trend of tightening over the last several reports.  USDA’s 2020/21 season-average price estimate was increased 60 cents, to $11.15 per bushel.

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Yield Adjustments, but Still Record Crops (10/12/16)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbUSDA updated its projections for the 2016 corn and soybean crops. And while the national corn yield is reduced, the national soybean yield is increased and record production is still on the books for both crops. The national corn yield is set at 173.4 bushels per acre, down a bushel from last month, but still 2.4 bushels above the previous record set in 2014. With the yield this high, a 15 billion bushel corn crop is projected to be heading in from the fields during harvest. Combined with the 1.7 billion bushel carryover, total corn supplies for the 2016/17 marketing year stand at 16.85 billion bushels. Corn usage is also projected at record levels, but demand has not been able and is not projected to keep up with the supply surge. Corn export projections are raised 50 million bushels, bringing total usage up to a record 14.5 billion bushels. The end result is an ending stock level roughly 600 million bushels higher than we had for the 2015/16 marketing year, but slightly lower than last month’s estimate. That slight tightening of ending stocks gave USDA a little room to raise their projected price range by 5 cents per bushel, with the midpoint now at $3.25 per bushel.

The national soybean yield is projected at 51.4 bushels per acre, up 0.8 bushels from last month and well above the previous record. With production approaching 4.3 billion bushels, the soybean market has never had more beans to work with. So again, it’s a story of record supplies and demand, but demand growth lags behind supply growth. Soybean export projections are raised 40 million bushels, bringing total usage to 4.1 billion bushels. But ending stocks are projected to double and price projections are held steady, with the midpoint of the season-average farm price range set at $9.05 per bushel.

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Stocks Inline with Expectations (9/30/16)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbStock levels for corn and soybeans were up in the most recent USDA report, but the trade expected that as we move into the next marketing year. Corn ending stocks were estimated at 1.74 billion bushels, up just 6 million bushels from last year. While total corn stocks are about the same, farmers are holding more back on the farm than they did last year. Strong demand from the ethanol and export sectors boosted June-August corn disappearance by 9 percent. For soybeans, we entered the 2016/17 marketing year with 197 million bushels in storage. That’s 3 percent above last year’s level. And reversing the pattern for corn, less soybeans are being held by farmers on the farm. Summer crush and export demand were firm as well, with June-August soybean disappearance increasing by 55 percent. So the stocks report confirmed strong demand for corn and soybeans, but stocks still grew year-over-year.

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Supply and Demand Move Higher (7/12/16)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbThe July updates from USDA pushed both crop supplies and demands higher. But in the longer run, stock levels are projected to be higher, with steady to lower prices. On the supply side, the revised acreage and stock numbers from last month were fully incorporated into the projections. Corn production was increased by 110 million bushels, while soybean production rose by 80 million.

On the demand side, there were several offsetting moves. For corn in both old and new crop settings, feed and ethanol usage were lowered, while food and export usage rose. For soybeans, export demand was increased for both old and new crop. Crush demand was lifted slightly for the new crop, but seed and other uses were lowered for the old crop. Putting all of the shifts together results in slightly lower old crop ending stocks, but higher new crop (2016/17) stocks.

Season-average prices were held steady for soybeans, at $9.05 for the 2015/16 crop and $9.50 for the 2016/17 crop. Corn season-average prices were reduced by 5 cents on the 2015/16 crop to $3.65 per bushel and by 10 cents on the 2016/17 crop to $3.40 per bushel.

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Positive Demand News from USDA (6/10/16)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbUSDA’s June updates contained good news on the demand front for corn and soybeans. International demand continues to strengthen, while domestic usage holds steady. With no major changes on the supply side, this implies lower ending stocks and projections of higher prices. Starting with corn, the losses and delays in the South American harvest have opened up some off-season selling opportunities for the U.S. Old crop (2015/16) exports were raised 100 million bushels as a result. Although corn imports were increased slightly, the overall impact for old crop corn is a 95 million drop in ending stocks and a 10 cent increase in the season-average price to $3.70 per bushel. That drop in ending stocks, combined with another increase in new crop (2016/17) exports of 50 million bushels, lowered new crop ending stocks by 145 million bushels. The changes added 15 cents to the new crop corn season-average price estimate, raising it to $3.50 per bushel.

For soybeans, both old crop domestic and international demand were on the upswing. Crush added 10 million bushels, while exports grew by 20 million bushels. With the 30 million bushel drop in old crop ending stocks, USDA raised its 2015/16 season-average price by 20 cents to $9.05 per bushel. As with corn, the export demand increase extended into the new crop as well, adding another 15 million bushels. That pushed new crop ending stocks below 300 million bushels and lifted the 2016/17 season-average price estimate by 40 cents, to $9.50 per bushel.

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