USDA-WASDE FORECAST #598 March 10th 2020

03/10/2020

OVERVIEW

Predictably the March 10th 2020 USDA WASDE Report was little changed from February and included accurate yields for corn and soybeans and relatively unaltered price projections for these commodities.

 

Corn and soybean harvests reflected in the March 2020 WASDE are based on actual yield and harvested area. The corn acreage harvested was 81.5 million acres, unchanged from the January and February 2020 WASDE reports (81.8 million in 2018). Soybeans were harvested from 75.0 million acres, unchanged from the January and February 2020 WASDE reports. (88.3 million acres in 2018)

 

The March 2020 WASDE projected corn yield was unchanged at 168 bushels per acre, (178.9 bushels in 2018). The relatively low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was unchanged at 47.4 bushels per acre from the January 2020 WASDE, (52.1 bushels in 2018). There is concern that a wet spring in 2020 may delay planting again this season.

 

The March USDA projection for the ending stock of corn was unchanged at 1,892 million bushels. Due to increased exports the ending stock for soybeans was projected to be 425 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with conflicting reports on trade negotiations and the Phase-One of a trade agreement with China. It is presumed that projections are based on the assumption that China will delay commitments due to disruption caused by the COVID-19 outbreak. Reports on import volumes of commodities by China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.

 

CORN

The corn harvest for 2019 documented in the February 2020 WASDE Report #598 was unchanged at 13,692 million bushels consistent with acreage planted and yield. The projection for the 2019 new crop can be compared to the 2018 harvest of 14,420 million bushels and is down 10.1 percent from the 2016 record harvest of 15,148 million bushels. The “Ethanol and Byproducts” category was unchanged from February at 5,425 m. bushels possibly based on the prospect of year-round use of E-15 and a reduction in Small Refinery Exemptions, despite reduced domestic demand for E-10. Exports were held at 1,725 million bushels taking into account intense competition and increased production from Brazil and Argentine and World domestic coarse grain production relative to demand. The “Feed and Residual” category was retained at 5,525 million bushels. Ending stocks were held at 1,892 m. bushels.

 

The forecast USDA farm price was lowered from February by 5 cents per bushel to 380 cents per bushel. Near close of trading on March 10 th after release of the WASDE the CME quotations for March and May 2020 corn were 380 cents and 378 cents per bushel up 0.3 percent and down 1.6 percent respectively from quotations on February 11th.

 

MARCH 2020 WASDE #598 ESTIMATES FOR THE 2019 CORN HARVEST:

Harvest Area

81.5 m acres

(89.7 m. acres planted, corresponding to 90.8% of acres harvested)

Yield

168.0 bushels per acre

(was 167.0 bushels per acre in December WASDE.)

Beginning Stocks

2,220 m. bushels

 

Production

13,692 m. bushels

 

Imports

50 m. bushels

 

Total Supply

15,962 m. bushels

Proportion of Supply

Feed & Residual

5,525 m. bushels

34.6%

Food & Seed

1,395 m bushels

8.7%

Ethanol & Byproducts

5,425 m. bushels

34.0%

Domestic Use

12,345 m. bushels

77.3%

Exports

1,725 m. bushels

10.8%

Ending Stocks

1,892 m. bushels

11.9%

Stock-to-domestic use proportion

15.3%

(Was 15.4 % in the January 2020 WASDE Report)

1 metric ton = 39.368 bushels

Average Farm Price: $3.80 per bushel. (Down 5 cents per bushel from the February 2020 WASDE Report)

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 3,558 million bushels, unchanged from the January and February 2020 WASDE estimates, based on a yield of 47.4 bushels per acre. Use parameters were retained from the February 2020 WASDE Report with crushings held at 2,105 m. tons. Projected exports were unchanged from February at 1,825 million bushels, presumably anticipating delayed shipments to China during 2020 in accordance with the Phase-One Agreement. In 2018 the U.S. identified and supplied new alternative markets as a response to punitive duties and the ban imposed by China in 2019. It is ironic that some of this volume is probably transshipped to China. In recent years our largest trading partner imported the equivalent of 25 percent of U.S. soybeans. Ending stocks were adjusted down to 425 million bushels.

 

The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 870 cents per bushel, down 5 cents per bushel from the February 2020 WASDE estimate. Near close of trading on March 10th following release of the WASDE the CME quotations for soybeans for March and May 2020 delivery were 872 cents and 877 cents per bushel down 1.5 percent and 2.2 percent respectively from CME quotations on February 11th.

 

Projected output of soybean meal was held at 49.5 million tons. Domestic use was unchanged at 36.8 million tons. Exports were retained at 13.2 million tons despite an uncertain trade environment. The USDA retained the ex plant price of soybean meal from the January WASDE at $305 per ton. Near close of trading on March 10th CME quotations for March and May 2020 deliveries of soybean meal were $297 and $303 higher by 2.1 percent and 3.0 percent respectively compared to February 11 th.

 

MARCH 2020 WASDE #598 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:-

Harvest Area

75.0 m acres

(76.1 m. acres planted, harvest corresponding to 98.0% of planted acreage)

Yield

47.4 bushels per acre

(Was 46.9 bushels per acre in December 2019 WASDE)

Beginning Stocks

909 m. bushels

(Was 1,005 m. bushels in December 2019 WASDE)

Production

3,558 m. bushels

 

Imports

15 m. bushels

 

Total Supply

4,482 m. bushels

Proportion of Supply

Crushings

2,105 m. bushels

46.9%

Exports

1,825 m bushels

40.8%

Seed

99 m. bushels

2.2%

Residual

29 m. bushels

0.6%

Total Use

4,058 m. bushels

90.5%

Ending Stocks

425 m. bushels

9.5%

(Was 475 m. bushels in January WASDE)

1 metric ton = 76.34 bushels

Average Farm Price: 870 cents per bushel (Down 5 cents per bushel from the February WASDE Report)

 

MARCH 2020 SOYABEAN MEAL

Beginning Stocks

0.402 m. tons

Production

49.473 m. tons

Imports

0.500 m. tons

Total Supply

50.375 m. tons

Domestic Use

36.800 m. tons

Exports

13.200 m. tons

Total Use

50.000 m. tons

Ending Stocks

0.375 m. tons

 

Average Price ex plant : $305 (Unchanged from the January and February 2020 WASDE Reports)

 

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest low to stable 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:-

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

o 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:-

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

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

 

WORLD SITUATION

Global soybean production was raised 2.4 million m. tons to 341.8 million m. tons, with Argentina and Brazil contributing an additional 1 million m. tons each to World supply.

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: billon m. tons

Coarse Grains

Oil Seeds

Output

1.403

580

Supply

1.751

800

World Trade

200

175

Use

1.423

498

Ending Stocks

327

117

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






































































































































































































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