USDA-WASDE FORECAST #590 July 11th 2019

07/11/2019

OVERVIEW

The July 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 at 83.6 million acres (81.8 million in 2018) and is up 1.4 percent from the June WASDE. In 2019 soybeans will be harvested from 79.3 million acres (88.3 million acres in 2018) with the reduction due to uncertainty over the export market.

The USDA projected corn yield to attain 166.0 bushels per acre, (178.9 bushels in 2018) and unchanged from the June WASDE despite late planting and delayed development. Soybean yield was projected at 48.5 bushels per acre (52.1 bushels in 2018), 5 percent lower than in the June WASDE projection. These values presume suitable growing conditions, the time of sowing and standard rates of germination.

The July USDA projection of ending stock for corn was increased by 20.0 percent percent from the June WASDE to 2,010 million bushels. Ending stock for soybeans will be 23.9 percent lower at 795 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 failure to commit to purchases following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka.

CORN

The corn harvest for 2019 documented in the July WASDE Report is projected to be 13,875 million bushels consistent with complete emergence of the crop and extending to delayed onset of silking. The projection for 2019 can be compared to the 2018 harvest of 14,420 million bushels and is down 8.4 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained from June at 5,550 m. bushels despite the prospect of year-round use of E-15. Exports were held at 2,150 million bushels based on competition from Brazil and Argentine and increased World domestic coarse grain production relative to demand. The "Feed and Residual" category was raised 0.5 percent to 5,175 million bushels. Ending stocks will decrease by a substantial 20.0 percent to 2,010 m. bushels. The projected USDA farm price was estimated to be 370 cents per bushel down 10 cents from the June WASDE projection. At 12H30 on July11 th after release of the WASDE the CME quotations for July 2019 and September 2019 corn were both 436 cents per bushel, 2.1 percent and unchanged respectively from the trade levels on June 11th.

July 2019 WASDE #590 ESTIMATE FOR THE 2019 CORN HARVEST:

Harvest Area 83.6 m* acres (91.7 m. acres planted, corresponding to 91.1 % of area harvested)

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

Beginning Stocks 2,340 m. bushels

Production 13,875 m. bushels

Imports 50 m. bushels

Total supply 16,265 m bushels Proportion of Supply

Feed & residual 5,175 m. bushels 31.8%

Food & Seed 1,430 m. bushels 8.8%

Ethanol & byproducts 5,500 m. bushels 33.8 %

Domestic Use 12,105 m. bushels 74.4%

Exports 2,150 m. bushels 13.2%

Ending Stocks 2,010 m. bushels 12.4%

Stock-to- domestic use proportion 16.6% (Was 20.0% in the May 2019 WASDE Report)

Average Farm Price: $3.70 per bushel . (Down 10 cents per bushel compared to the June 2019 WASDE Report)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 3,815 million bushels, 7.3 percent lower than the June estimate, based on a yield of 48.5 bushels per acre from a 5.3 percent lower area to be harvested. Use parameters were essentially unchanged from the June 2019 WASDE Report with crushings at 2,115 m. tons. Projected exports were lowered to 1,875 million bushels, presumably anticipating resolution of the trade conflict with China. This figure appears speculative given that negotiations have just resumed and both the U.S. and China have imposed mutually punitive duties. China ceased imports in July 2018 resuming 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 with requests for a delay in shipping. Orders are significantly lower than in 2017 the last year with a normal purchase pattern. Ending stocks were adjusted down 23.9 percent to 795 million bushels from 1,045 million bushels. The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 840 cents per bushel, 15 cents per bushel higher than the June WASDE estimate. At 12H30 on July11 th CME quotations for soybeans for July 2019 and September 2019 delivery were 892 cents and 894 cents per bushel respectively, higher by 4.1 percent and 2.5 percent compared to CME quotations on June 11 th.

Projected output of soybean meal was unchanged from the June 2019 WASDE at 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 rise in the price of soybean meal to $300 per ton compared to the June WASDE Report. At 12H30 on July 11th CME quotations for July and September 2019 deliveries of soybean meal were both $311 respectively, 0.7 percent and 1.6 percent lower than on June 11 th.

July 2019 WASDE #590 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 79.3 m. acres (80.0 m. acres planted, corresponding to 99.1% of planted acreage)

Yield 48.5 bushels per acre (was 49.5 bushels/acre in 2017, 52.1 bushels/acre in 2018)

Beginning Stock 1,050m. bushels (was 438m bushels in April WASDE)

Production 3,845m bushels

Imports 20m. bushels

Total Supply 4,915m bushels Proportion of Supply

Crushings 2,115m. bushels 43.1%

Exports 1,875m. bushels 38.1%

Seed 96m. bushels 2.0%

Residual 34 m. bushels 0.7%

Total Use 4,120 m. bushels 83.9%

Ending Stocks 795 m. bushels 16.1% (was 1,045m bushels in June WASDE)

Average Farm Price: 840 cents per bushel (Up 15 cents per bu. compared to the June 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 : $300 (Up $5 per ton compared to the June 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. and Ukraine.

The global projection for oilseeds was down 11.7 million m. tons due to lower production from Canada and 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 1.395 586

Supply 1.750 716

World trade 206 175

Use 1.422 502

Ending stocks 328 130

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






















































































































































































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