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USDA-WASDE FORECAST #581 September 13th 2018

09/13/2018

OVERVIEW

The September 13th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress with monitoring by "scouts", long-range weather forecasts and historical records. Harvest areas for corn and soybeans were retained from the July-August projections at 81.8 million acres (83.1 million in 2017) and 88.9 million acres, (89.5 million acres in 2017) respectively.

The USDA raised corn yield by 1.6 percent to 181.3 bushels per acre (175.4 bushels in 2017). Soybean yield was raised 2.3 percent to 52.8 bushels per acre (49.5 bushels in 2017).

The USDA September projection of ending stock for corn was raised 5.3 percent to 1,774 million bushels and ending stock for soybeans was raised 7.5 percent to 845 million bushels resulting in predictable declines in CME quotations.

The 2018 corn and soybean crops will be the second largest ever but will be harvested during a time of uncertainty regarding previously projected, anticipated and actual export volumes. The USDA projections of ending stocks and hence prices for corn and soybeans take into account current announced tariffs on U.S. products but do not reflect predicted or threatened tariffs or resolution of trade conflicts.

CORN

The projection of the corn harvest was raised 1.6 percent from the August WASDE Report to 14,827 million bushels consistent with the reality that 35 percent of the crop is mature and 5 percent has been harvested. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down only 2.2 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was raised 25 m. bushels to 5,650 m. bushels and exports were raised 50 m bushels to 2,400 million bushels. "Feed and Residual" was raised by 50 m. bushels to 5,575 million bushels. Ending stocks will increase 5.3 percent to 1,774 m. bushels. The projected USDA range in farm price was reduced by 10 cents per bushel on both ends of the range to 300 to 400 cents per bushel. At 14H00 on September 13th CME quotations for September and December 2018 corn were 338 cents and 351 cents per bushel respectively.

SEPTEMBER 2018 WASDE #581 ESTIMATE FOR THE 2018 CORN HARVEST:

Harvest Area 81.8 m* acres (89.1 m. acres planted, corresponding to 91.8 % of area harvested)

Yield 181.3 bushels per acre (was175.4 bushels per acre in 2017, 178.4 bushels August WASDE)

Beginning Stocks 2,002 m. bushels

Production 14,827 m. bushels

Imports 50 m. bushels

Total supply 16,879 m bushels Proportion of Supply

Feed & residual 5,575 m. bushels 33.0%

Food & Seed 1,480 m. bushels 8.8%

Ethanol & byproducts 5,650 m. bushels 33.5 %

Domestic Use 12,705 m. bushels 75.3%

Exports 2,400 m. bushels 14.2%

Ending Stocks 1,774 m. bushels 10.5%

Stock-to- domestic use proportion 14.0% (Was 13.3% in the August 2018 WASDE Report)

Average Farm Price: $3.00 to $4.00 per bushel . (Down 10 cents per bushel on both ends of the range compared to the August 2018 WASDE Report)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA updated the projected soybean harvest by 2.4 percent from the August WASDE Report to 4,693 million bushels due to a revised yield of 52.8 bushels per acre. Use parameters were essentially unchanged from the August 2018 WASDE Report except that crushings were increased by 0.5 percent to 2,070 m. tons. Projected exports were held to 2,060 million bushels following an anticipated decline of 10.9 percent documented in July due to retaliatory tariffs imposed by China. Ending stocks were increased by 7.6 percent to 845 million bushels. The USDA projection of the ex-farm price for soybeans for the 2018 harvest was down 30 cents per bushel on both ends of the range to 735 cents to 985 cents per bushel. At 14h00 on September 13 th CME quotations for soybeans for September and November 2018 delivery were 832 cents (a decade-low value) and 836 cents per bushel respectively.

Projected output of soybean meal was raised from the August 2018 WASDE to 48.95 million tons. Domestic use was raised slightly to 35.8 million tons. Exports were retained at 13.5 million tons. The USDA lowered the projection of soybean meal prices to a range of $290 to $330 per ton. At close of trading on September 13th CME quotations for September and December 2018 deliveries of soybean meal were $311 and $316 respectively.

SEPTEMBER 2018 WASDE #581 ESTIMATE FOR THE 2018 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 88.9m. acres (89.6 m. acres planted, corresponding to 99.2% of planted acreage )

Yield 52.8 bushels per acre (was 49.5 bushels/acre in 2017, 51.6 bushels on August WASDE)

Beginning Stock 395m. bushels

Production 4,693m bushels

Imports 25m. bushels

Total Supply 5,113m bushels Proportion of Supply

Crushings 2,070m. bushels 40.5%

Exports 2,060m. bushels 40.4% (was 42.6% in July)

Seed 103m. bushels 2.0%

Residual 33 m. bushels 0.6%

Total Use 4,266 m. bushels 83.5%

Ending Stocks 845 m. bushels 16.5%

Average Farm Price: 735 to 985 cents per bushel (Down 30 cents per bushel on both ends of the range from the August 2018 WASDE Report)

Soybean Meal

Beginning Stocks 0.400 m. tons

Production 48.950 m. tons

Imports 0.350 m. tons

Total Supply 49.700 m. tons

Domestic Use 35.800 m. tons

Exports 13.500 m. tons

Total Use 49.300 m. tons

Ending Stocks 0.400 m. tons

Average Price ex plant : $290 to $330 per ton (Down $5 per ton on both ends of the August 2018 WASDE Report)

IMPLICATIONS FOR PRODUCTION COST

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

Updated World production and use of total grains and oilseeds is summarized for the 2017/2018 season taking into account Northern and Southern Hemisphere production are:-

Factor m.tons. Coarse grains Oilseeds

Output 1.347 605

Supply 1.571 715

World trade 200 181

Use 1.386 500

Ending stocks 185 122

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