By Kent Thiesse
Despite some slightly bearish grain market data, corn and soybean prices actually increased following release of the USDA Grains Supply and Demand Report on July 11.
2019 U.S. planted corn acreage increased and the national soybean acreage decreased from June estimates, matching crop acreage numbers in the June 28 USDA crop acreage report. Many private crop analysts, however, are questioning the USDA acreage numbers and think further adjustments are likely.
Based on the July 11 report, USDA is projecting that 2019-20 corn ending stocks will be 2.01 billion bushels by August 31, 2020. That’s an increase of 335 million bushels in the carryover level from the mid-June WASDE report and compares to ending stocks of 2.34 billion bushels for 2018-19.
The 2019-20 carryover level is based on 83.6 million harvested corn acres in the U.S. for 2019 and an average U.S. corn yield of 166.0 bushels per acre, resulting in an estimated 2019 total corn production of 13.875 billion bushels.
This compares to total U.S. corn production of just over 14.25 billion bushels in 2018 and 14.4 billion bushels in 2017. The total corn usage for 2019-20 is estimated at just over 14.25 billion bushels, which would be at the same level as estimated total corn usage for 2018-19.
USDA is now projecting 2019-20 market year average corn price at $3.80 per bushel, flat from June. The final 2018-19 national MYA price is now estimated at $3.60 per bushel, compared to $3.36 in both 2017-18 and 2016-17 and $3.61 in 2015-16.
Planted soybean acreage is now estimated at 80 million acres, down from 4.6 million acres in June, and far below the record national soybean acreage of 89.2 million acres in 2018. The report projected 79.3 harvested acres of soybeans in 2019, with a U.S. average soybean yield of 48.5 bushels per acre, down one bushel per acre from June.
Total U.S soybean production for 2019 is now estimated at just over 3.84 billion bushels, which would be down considerably from the record U.S. soybean production of 4.54 billion bushels in 2018.
Projected total soybean usage for 2019-20 is 4.12 billion bushels, an increase from 3.95 billion bushels for 2018-19. The increased usage for the marketing year is the result of higher levels expected for both the domestic soybean crush and soybean exports in 2019-20.
Estimated soybean ending stocks at the end of the 2019-20 marketing year are at 795 million bushels, which is still high, but a 24 percent decline from the 1.05 billion bushels of carryover estimated for 2018-2019.
The estimated national MYA soybean price for the 2019-20 marketing year is $8.40 per bushel, down ten cents from last year. The final MYA soybean price for 2019-20 trails the final MYA price in other recent years $9.33 per bushel for 2017-18, $9.47 per bushel in 2016-17 and $8.95 per bushel in 2015-16.
Based on the immediate corn and soybean market reaction following recent WASDE report, it is fairly obvious that weather conditions and crop production potential are currently dominating the marketing decisions of grain traders. Many private analysts feel that total 2019 U.S. corn acreage may be overestimated by USDA, and that the number of prevented planted acres may be under-estimated. Some analysts are also questioning the current U.S. average yield estimates of 166 bushels per acre for corn and 48.5 bushels per acre for soybeans. Those will both clear up as fall approaches.
Both “old crop” and “new crop” corn and soybean prices have been in a fairly bullish trend in the past few weeks, primarily due to the late planting in many areas of the Corn Belt and concerns over 2019 production levels.
Chicago Board of Trade prices for December corn futures closed at $4.48 per bushel on July 11, up from $3.72 per bushel following the May 10th WASDE report. A year ago, CBOT December corn futures for 2018 were trading near $3.59 per bushel following the July 12th WASDE report. By comparison, CBOT December corn futures were at $3.98 per bushel on July 12, 2017, and $3.58 per bushel on July 12, 2016.
Soybean futures prices on the CBOT have also increased since the May 10th WASDE report. The closing November soybean futures price following the July 11th WASDE report was $9.17 per bushel, an increase of 84 cents per bushel from May 10. The CBOT price for November soybean futures compares to “new crop” soybean futures prices of $8.49 per bushel on July 12, 2018, $10.34 per bushel on July 12, 2017 and $10.57 per bushel on July 12, 2016.
Local forward cash prices for “new crop” 2019 corn have risen to over $4.00 per bushel at most locations in the Upper Midwest, which will help offset the reduced corn yields for many producers. By July 12, the local current cash corn price for remaining 2018 corn in on-farm storage was also above $4.00 per bushel at most locations in the northern Corn Belt, with tighter local basis levels than earlier this year. This has also provided a welcome opportunity for farmers that are still selling unpriced 2018 corn, which is being delivered before the 2019 harvest season.
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