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USDA-WASDE FORECAST #589 June 11th 2019

06/11/2019

OVERVIEW

The June 11th 2019 USDA WASDE projections for the 2019 corn and soybean harvests are based on historical yield and harvest data. The corn acreage to be harvested was determined from planting completed and stated intentions at 82.4 million acres (81.8 million in 2018) and down 3.5 percent from the May WASDE. In 2019 soybeans will be harvested from 87.8 million acres (88.3 million acres in 2018). There was apparently no material change due to recent Midwest flooding or the forecast for wet conditions from snowmelt delaying planting.

The USDA projected corn yield to attain 166.0 bushels per acre, (178.9 bushels in 2018) and down 5.7 percent from the May WASDE. Soybean yield was projected at 49.5 bushels per acre (52.1 bushels in 2018). These values presume suitable planting and growing conditions, time of sowing and standard rates of germination.

The May USDA projection of ending stock for corn was reduced by 32.6 percent from the May WASDE to 1,675 million bushels. Ending stock for soybeans will be 8.5 percent higher at 970 million bushels. Ending stocks for both corn and soybeans have influenced recent CME price quotations. It is emphasized that projections are based on the presumption of at least a partial settlement of the trade dispute with China followed by restoration of exports to that Nation, a prospect that appears in question given lower demand from China and the latest round of tariffs imposed by both nations.

CORN

The corn harvest for 2019 documented in the June WASDE Report is projected to be 13,680 million bushels consistent with current planting. The projection for 2019 can be compared to the 2018 harvest of 14,420 million bushels and is down 9.7 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was reduced to 5,550 m. bushels despite the year-round use of E-15. Exports were reduced to 2,150 million bushels based on competition from Brazil and Argentine and increased World domestic coarse grain production. The "Feed and Residual" category was reduced 5.5 percent to 5,150 million bushels. Ending stocks will decrease by a substantial 32.6 percent to 1,675 m. bushels. The projected USDA farm price was estimated to be 380 cents per bushel up 50 cents from the May WASDE range. At close of trading on June 11 th CME quotations for July 2019 and September 2019 corn were 427 cents and 436 cents per bushel respectively, 14.1 percent and 14.2 percent higher than the trade levels on May 10th.

June 2019 WASDE #589 ESTIMATE FOR THE 2019 CORN HARVEST:

Harvest Area 82.4 m* acres (89.8 m. acres planted, corresponding to 91.8 % of area harvested)

Yield 166.0 bushels per acre (was175.4 bushels per acre in 2017, 178.9 bushels per acre 2018)

Beginning Stocks 2,195 m. bushels

Production 13,680 m. bushels

Imports 50 m. bushels

Total supply 15,925 m bushels Proportion of Supply

Feed & residual 5,150 m. bushels 32.3%

Food & Seed 1,450 m. bushels 9.1%

Ethanol & byproducts 5,500 m. bushels 34.5 %

Domestic Use 12,100 m. bushels 75.9%

Exports 2,150 m. bushels 13.5%

Ending Stocks 1,675 m. bushels 10.6%

Stock-to- domestic use proportion 13.8% (Was 20.0% in the May 2019 WASDE Report)

Average Farm Price: $3.80 per bushel . (Up 50 cents per bushel compared to the May 2019 WASDE Report)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 4,150 million bushels, unchanged from the May estimate, based on a yield of 49.5 bushels per acre with a 0.3 percent lower area to be harvested. Use parameters were essentially unchanged from the May 2019 WASDE Report with crushings at 2,115 m. tons. Projected exports were held at 1,950 million bushels, presumably in anticipation of a resolution of the trade conflict with China. This figure appears speculative given that negotiations are still in progress and both the U.S. and China have imposed mutually punitive duties. China ceased imports in July 2018 resuming with low orders in the second quarter of 2019. This nation is usually responsible for imports equivalent to 25 percent of U.S. production. Orders have been placed by China for soybeans to be delivered before September 2019 but at a lower level than in 2017 that represented a normal purchase pattern. Ending stocks were adjusted up to 1,045 million bushels from 895 million bushels. The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 825 cents per bushel, 15 cents per bushel higher than the 810 cent mid-point of the May WASDE estimate. At close of trading on June 11th CME quotations for soybeans for July 2019 and September 2019 delivery were 857 cents and 872 cents per bushel respectively, higher by 2.5 percent and 2.7 percent compared to CME quotations on May 10th.

Projected output of soybean meal was reduced 0.3 percent from the May 2019 WASDE to 49.7 million tons. Domestic use was unchanged at 36.6 million tons. Exports remained at 13.6 million tons despite an uncertain trade environment. The USDA projected a $5 per ton change in the price of soybean meal to $295 per ton compared to the May WASDE Report. At close of trading on June 11th CME quotations for July and September 2019 deliveries of soybean meal were $313 and $316 respectively, 4.3 percent and 5.0 percent lower than on May 10th.

June 2019 WASDE #589 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 83.8 m. acres (84.6 m. acres planted, corresponding to 99.1% of planted acreage)

Yield 49.5 bushels per acre (was 49.5 bushels/acre in 2017, 52.1 bushels/acre in 2018)

Beginning Stock 1,070m. bushels (was 438m bushels in April WASDE)

Production 4,150m bushels

Imports 20m. bushels

Total Supply 5,240m bushels Proportion of Supply

Crushings 2,115m. bushels 40.5%

Exports 1,950m. bushels 37.2%

Seed 96m. bushels 1.8%

Residual 34 m. bushels 0.6%

Total Use 4,195 m. bushels 80.1%

Ending Stocks 1,045 m. bushels 19.9% (was 895m bushels in May WASDE)

Average Farm Price: 825 cents per bushel (Up 15 cents per bu. compared to the May WASDE Report)

Soybean Meal

Beginning Stocks 0.450 m. tons

Production 49.650 m. tons

Imports 0.500 m. tons

Total Supply 50.600 m. tons

Domestic Use 36.600 m. tons

Exports 13.600 m. tons

Total Use 50.200 m. tons

Ending Stocks 0.400 m. tons

Average Price ex plant : $295 (Up $5 per ton compared to the May WASDE Report)

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest higher production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

  • For each 10 cents per bushel change in corn:-

  • The cost of egg production would change by 0.45 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound

  • For each $10 per ton change in the cost of soybean meal:-

  • The cost of egg production would change by 0.40 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound.

WORLD SITUATION

Forecasts for corn were raised for the U.S. Brazil, Russia and South Africa but lowered for Ukraine, China and Canada.

The global projection for oilseeds was down 0.3 billion m. tons due to lower production from Brazil.

Updated World production and use of total grains and oilseeds is summarized for the 2019/2020 season taking into account Northern and Southern Hemisphere production:-

Factor Billion m.tons. Coarse grains Oilseeds

Output 1.390 598

Supply 1.741 728

World trade 205 175

Use 1.421 502

Ending stocks 320 130

(1 metric ton corn= 40 bushels) ("ton" represents 2,000 pounds)


 
Copyright 2019 Simon M. Shane