Pro Farmer: USDA Rocks Markets with Corn Estimates

03:20PM Aug 12, 2019
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Pro Farmer
( Pro Farmer )

Market reaction

Ahead of USDA's reports, corn futures were trading 6 to 7 cents lower, soybeans were 5 to 6 cents lower, SRW wheat futures were around a penny lower, HRW futures were around 6 cents lower, spring wheat futures were 1 to 3 cents higher and cotton futures were 60 to 115 points lower.

Markets extended losses in reaction to the reports. Corn futures are locked their 25-cent limit lower. Soybeans are down 11 to 14 cents. Winter wheat futures are 25 to 20 cents lower, while spring wheat are down 7 to 13 cents. And cotton futures are 75 to 110 points lower.  

 

Crop production

Corn: 13.901 billion bu.; trade expected 13.193 billion bu.
— compares to 13.875 billion bu. projected in July
Beans: 3.680 billion bu.; trade expected 3.800 billion bu.
— compares to 3.845 billion bu. projected in July
Cotton: 22.516 million bales; trade expected 21.99 million bales 
— compares to 22.00 million bales projected in July
All wheat: 1.980 billion bu.; trade expected 1.925 billion bu. 
— compares to 1.921 billion bu. in July
All winter wheat: 1.326 billion bu.; trade expected 1.294 billion bu. 
— compares to 1.291 billion bu. in July
HRW: 840 million bu.; trade expected 809 million bu. 
— compares to 805 million bu. in July
SRW: 257 million bu.; trade expected 257 million bu. 
— compares to 259 million bu. in July
White winter: 229 million bu.; trade expected 228 million bu. 
— compares to 227 million bu. in July
Other spring wheat: 597 million bu.; trade expected 569 million bu.
— compares to 572 million bu. in July
Durum: 57 million bu.; trade expected 57 million bu.
— compares to 58 million bu. in July

USDA’s initial corn crop estimate came in 708 million bu. above what traders expected and 26 million bu. higher than the July projection. The estimate would be 519 million bu. less than last year’s production. After resurveying 13 states, USDA estimates planted corn acreage at 90.005 million acres, down 1.695 million acres from its June estimate. USDA estimates corn harvested for grain at 82.017 million acres, down 1.578 million acres from June. USDA’s harvested acreage percentage is now 91.1%, down 0.1 point from the June estimate, which is down just fractionally from normal. USDA estimates the national average corn yield at 169.5 bu. per acre, down 6.9 bu. per acre from last year but up 3.5 bu. from its July projection.  

Looking at the state-by-state yields, corn yields are expected to decrease from year-ago in Illinois (down 29 bu. per acre to 181 bu.), Indiana (down 23 bu. to 166 bu.), Iowa (down 5 bu. to 191 bu.), Minnesota (down 9 bu. to 173 bu.), Nebraska (down 6 bu. to 186 bu.), North Dakota (down 7 bu. to 146 bu.), Ohio (down 27 bu. to 160 bu.) , South Dakota (down 3 bu. to 157 bu.) and Wisconsin (down 7 bu. to 165 bu. per acre). USDA estimates corn yields will rise from year-ago in Kansas (up 6 bu. to 135 bu.), Michigan (up 2 bu. to 155 bu.) and Missouri (up 20 bu. to 160 bu. per acre).

USDA’s first soybean crop estimate came in 120 million bu. below what traders anticipated and 165 million bu. below the July projection. The soybean crop is estimated to be down 864 million bu. from last year. After resurveying 14 states, USDA estimates planted soybean acreage at 76.700 million acres, down 3.34 million acres from June. USDA estimates harvested soybean acres at 75.866 million acres, down 3.4 million acres from June. USDA’s harvested acreage percentage at 98.9% is down 0.1 point from June, which is close to normal. USDA estimates the national average soybean yield at 48.5 bu. per acre, unchanged from the July projection.

Looking at the state-by-state yields, soybean yields are expected to decrease from last year in Illinois (down 10 bu. to 55 bu. per acre), Indiana (down 8.5 bu. to 50 bu.), Iowa (down 2 bu. to 55 bu.), Kansas (down 1.5 bu. to 42 bu.), Michigan (down 3 bu. to 45 bu.), Minnesota (down 4.5 bu. to 46 bu.), Nebraska (down 1 bu. to 58 bu.), North Dakota (down 0.5 bu. to 35 bu.), Ohio (down 10 bu. to 48 bu.), South Dakota (down 1 bu. to 45 bu.) and Wisconsin (down 2 bu. to 47 bu. per acre). The only major soybean states USDA doesn’t estimate a lower yield than last year are Arkansas (unchanged at 51 bu.) and Missouri (unchanged at 45 bu. per acre.).

USDA’s all-wheat crop estimate came in 55 million bu. higher than traders expected and up 59 million bu. from July. USDA raised its winter wheat crop estimate by 35 million bu. and its spring wheat crop peg by 25 million bu. from last month. USDA estimates the winter wheat yield at 53.2 bu. per acre, up 1.4 bu. from July. The spring wheat yield is estimated at 49.2 bu. per acre, up 2 bu. from last month. USDA’s all-wheat yield of 51.6 bu. per acre is up 1.6 bu. from July.

USDA’s initial cotton crop estimate was 526 million bu. higher than traders anticipated and 516 million bu. above last year. After resurveying acreage is some states, USDA increased its cotton planted acreage estimate by 183 million acres to 13.903 million acres. USDA estimates harvested cotton acreage at 12.637 million acres for a harvested percentage of 90.9%. USDA estimates the national average cotton yield at 855 lbs. per acre, down 9 lbs. from last year. USDA estimates cotton yields at 662 lbs. per acre, down 95 lbs. from last year. The Georgia yield is estimated at 932 lbs. per acre, up 213 lbs. from last year’s hurricane-damaged crop.


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U.S. carryover

Corn: 2.360 billion bu. for 2018-19; up from 2.340 billion bu. in July
— 2.181 billion bu. for 2019-20; up from 2.010 billion bu. in July
Beans: 1.070 billion bu. for 2018-19; up from 1.050 billion bu. in July
— 755 million bu. for 2019-20; down from 795 million bu. in July
Wheat: 1.072 billion bu. for 2018-19; unch. from 1.072 billion bu. in July
— 1.014 billion bu. for 2019-20; up from 1.000 billion bu. in July
Cotton: 5.25 million bales for 2018-19; up from 5.00 million bales in July
— 7.2 million bales for 2019-20; up from 6.70 million bales in July

 On old-crop corn, USDA raised carryover 20 million bu. from last month. On the supply-side, it cut imports 5 million bu. to reduce total old-crop supplies by that amount. On the demand-side, USDA held old-crop feed & residual use unchanged at 5.275 billion bu., but it cut estimated food, seed & industrial use 25 million bu. to 6.855 billion bushels. (The entire cut to FSI came out of corn-for-ethanol, which is now estimated at 5.425 billion bushels.) USDA left old-crop corn exports unchanged from last month at 2.1 billion bushels. The net result was the 20-million-bu. increase in carryover. USDA left the 2018-19 national average on-farm cash corn price unchanged at $3.60.

On new-crop corn, big changes on acres and yield from last month resulted in just a 26-million-bu. increase in the crop. Along with the bump in beginning stocks, total new-crop supplies are estimated up 46 million bu. from July. On the demand side, USDA left feed & residual use unchanged at 5.175 billion bu., but cut estimated FSI use 25 million bushels (to 6.905 billion, with all the cut coming out of corn-for-ethanol, which now stands at 5.475 billion bu.). USDA also cut estimated exports 100 million bu. from last month to 2.050 billion bushels. The result of a 46-million-bu. increase in supplies and a 125-million-bu. cut in total use is a 171-million-bu. increase in estimated carryover from last month. USDA puts the national average on-farm cash corn price for 2019-20 at $3.60, down a dime from July.

Old-crop soybean carryover climbed 20 million bu. from last month. USDA made no change on the supply-side of the 2018-19 balance sheet, but it cut estimated crush by 20 million bu. (to 2.065 billion bu.) and estimated seed use by 4 million bushels (to 89 million bu.). That was partially offset by a 3-million-bu. increase in estimated residual use, which now stands at to 75 million bushels. USDA left the 2018-19 national average on-farm cash bean price unchanged from July at $8.50.

New-crop soybean carryover dropped 40 million bu. from last month on USDA’s dramatic cuts to estimated 2019 bean plantings. The smaller crop was partially offset by the bigger beginning stocks, but total supplies are still estimated down 144 million bu. from last month. On the demand side, estimated crush was unchanged from last month at 2.115 billion bu., but USDA slashed estimated exports 100 million bu. to 1.775 billion bushels. USDA also trimmed estimated new-crop residual use by 4 million bu., to 30 million bushels. The net result was a 104-million-bu. drop in estimated total bean use from last month to 4.016 billion bushels. To go along with the 40-million-bu. drop in carryover, USDA left the national average on-farm cash bean price for 2019-20 unchanged from July at $8.40.

For 2019-20 wheat, USDA’s increase in the national average wheat yield increased total supplies by 59 million bu. from last month. Estimated new-crop wheat imports were cut 5 million bu., resulting in a 54-million-bu. jump in total supplies. On the demand side, USDA cut estimated food use 5 million bu. (to 960 million bu.), left seed use unchanged at 68 million bu. and increased estimated feed & residual use 20 million bushels (to 170 million bu.). Estimated 2019-20 wheat exports were also increased 25 million bu. to 975 million bushels. The 40-million-bu. increase in total wheat use resulted in a 14-million-bu. increase in ending stocks. USDA cut the estimated national average on-farm cash wheat price for 2019-20 to $5.00, down 20 cents from July.

USDA’s old-crop cotton carryover estimate climbed 250,000 bales from last month. USDA made no changes to the supply-side of the old-crop cotton balance sheet, but it cut 280,000 from estimated cotton exports to 14.22 million bales. That drop in export demand was partially offset by an increase in unaccounted use, resulting in the 250,000-bale increase in carryover. The national average 2018-19 cash cotton price was unchanged from July at 70 cents.

On new-crop cotton, USDA increased harvested acres and the national average yield to increase the crop by 520,000 bales. Combined with the increase in beginning stocks, total supplies for 2019-20 are up 760,000 bales from last month. USDA increased estimated new-crop cotton exports by 200,000 bales (to 17.2 million bales) and increased unaccounted new-crop use by 60,000 bales to result in a 500,000-bale increase in cotton carryover from last month. The national average on-farm cash cotton price for the 2019-20 marketing year was put at 60 cents, down 3 cents from last month.

 

Global carryover (without China)

Corn: 116.74 MMT for 2018-19; down from 118.92 MMT in July
— 111.91 MMT for 2019-20; up from 107.1 MMT in July
Beans: 94.33 MMT for 2018-19; up from 91.78 MMT in July
— 82.37 MMT for 2019-20; down from 83.15 MMT in July
Wheat: 135.73 MMT for 2018-19; up from 135.45 MMT in July
— 139.43 MMT for 2019-20; down from 140.57 MMT in July
Cotton: 44.68 million bales in 2018-19; up from 43.91 million bales in July
— 48.74 million bales for 2019-20; up from 47.43 million bales in July

 

Global production highlights

Argentina beans: 56.0 MMT for 2018-19; compares to 56.0 MMT in July
— 53.0 MMT for 2019-20; compares to 53.0 MMT in July
Brazil beans: 117.0 MMT in 2018-19; compares to 117.0 MMT in July
— 123.0 MMT for 2019-20; compares to 123.0 MMT in July
Argentina wheat: 19.5 MMT in 2018-19; compares to 19.5 MMT in July
— 20.5 MMT for 2019-20; compares to 20.0 MMT in July
Australia wheat: 17.3 MMT in 2018-19; compares to 17.3 MMT in July
— 21.0 MMT for 2019-20; compares to 21.0 MMT in July
China wheat: 131.43 MMT in 2018-19; compares to 131.43 MMT in July
— 132.0 MMT for 2019-20; compares to 132.0 MMT in July
Canada wheat: 31.8 MMT in 2018-19; compares to 31.8 MMT in July
— 33.3 MMT for 2019-20; compares to 33.3 MMT in July
EU wheat: 136.86 MMT for 2018-19; compares to 137.22 MMT in July
— 150.0 MMT for 2019-20; compares to 151.3 MMT in July
Russia wheat: 71.69 MMT for 2018-19; compares to 71.69 MMT in July
— 73.0 MMT for 2019-20; compares to 74.2 MMT in July
Ukraine wheat: 25.06 MMT for 2018-19; compares to 25.06 MMT in July
— 29.2 MMT for 2019-20; compares to 29.0 MMT in July
China corn: 257.33 MMT for 2018-19; compares to 257.33 MMT in July
— 254.0 MMT for 2019-20; compares to 254.0 MMT in July
Argentina corn: 51.0 MMT for 2018-19; compares to 51.0 MMT in July
— 50.0 MMT for 2019-20; compares to 50.0 MMT in July
South Africa corn: 11.5 MMT for 2018-19; compares to 11.5 MMT in July
— 14.0 MMT in 2019-20; compares to 14.0 MMT in July
Brazil corn: 101.0 MMT for 2018-19; compares to 101.0 MMT in July
— 101.0 MMT for 2019-20; compares to 101.0 MMT in July
China cotton: 27.75 million bales for 2018-19; compares to 27.75 million bales in July
— 27.75 million bales for 2019-20; compares to 27.75 million bales in July