Market Analysis: The USDA released their 2020/21 major US crops economic derived supply/demand forecasts at last week’s Agricultural Outlook Forum. The DC analysts made some slight acreage changes from their fall baselines projections. The USDA’s new-crop ending stock forecasts were smaller than the trade estimates in a couple major crops.
Chief Economist Johansson’s 2020 US acreage levels didn’t provide any surprises on Thursday via the trade average estimates. The USDA sliced 500,000 acres from their fall corn (CORN) baseline projection while adding 1 million to their US 2020 soybean (SOYB) seedings for an 85 million outlook. Their all-wheat US plantings were left unchanged from their fall 45 million acre ideas while cotton (BAL) (+500,000) & rice (+200,000) areas were upped from fall. Overall, the Ag Outlook’s 8 major crop (including small feedgrains) areas rose by just 1.1 million acres to 250.7 million vs. fall and just 150,000 acres higher than our expectations. These plantings could be lowest since 2011 because of saturated soils and low prices.
In corn, the USDA's 94 million plantings (400,000 acres over the trade estimate) along with their 178.5 bu. yield (same as baseline) produced a larger total supply than expected. With no changes in exports or ethanol demand and just 25 million bu rise in feed demand, the USDA’s 20/21 ending stocks declined just 117 million to 2.637 billion bu. Corn seedings, however, remain vulnerable from current soaked Midwest & SE fields this spring.
The USDA’s 85 million plantings and 49.8 bu. bean yield projects a 30 million bu. smaller crop than the trade. However, DC upped US bean exports by 155 million bu. This dropped new-crop stocks to 320 million (lowest since 2017) and 199 million below the trade’s average.
The USDA’s overall wheat (WEAT) seeding & yield estimates were left unchanged vs. their fall levels. With a smaller beginning stock and a stronger export outlook, the USDA projected a 777 million bu. 20/21 ending stocks. This is 52 million bu. below the trade’s estimate and the lowest ending stocks since 2015.
What’s Ahead: Despite multi-year lower 2020/21 US soybean & wheat stocks, China’s Coronavirus cloud and no recent crop purchases left many investors on the sidelines & prices defensive. However, Trump officials remain optimistic about Beijing meeting their commitments.
Utilize May rallies to price 10% of your corn and beans at $3.90-92 & $9.15-12 and 15% of your new-crop output at $3.97-4.00 & $9.40.
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