Pre-USDA Ag Forum S&D Ideas - What Will China’s Ag Imports Be During The 2020/21 US Crop Year?

Market Analysis

Each year, the USDA calculates economic derived supply-demand forecasts for the major U.S. crops at its annual Agricultural Outlook Forum being held on February 20 and 21 in Washington, DC. The USDA’s Chief Economist Johansson will provide some basic 2017 details during his AM re-marks on the 20th, while the complete balance sheets will be released on Friday AM.
2019’s wide-spread spring rains across the central US postponed seedings and created a record prevent planting levels last year. The big question is how producers will re-bound their overall plantings levels given the recently signed US/China trade deal. Last fall’s higher-than-expected WW seedings and this year’s strong rice prices could also impact both the Delta and US seeding mix.
Each fall, the USDA works up 10-year crop balance sheets called the Baseline Projections as part of their annual Farm Bill update for Congress. Because of last fall’s price relationships, the USDA upped corn’s 2020 seedings by 4.5 million acres to 94.5 million. However, this winter’s US/China trade deal, limited price activity and the higher plant-ing costs suggests 1.0-1.5 million lower Forum level of 93 million acres. This area along with a 177.5 bu. yield projects a 15.175 billion bu. crop. The USDA hasn’t changed their fall demand levels much previously, but corn’s feed and ethanol levels maybe adjusted resulting in 2021 stocks of 2.447 billion bu.
This winter’s US/China trade deal and bean’s lower input costs has us expecting a 1 million higher Ag Outlook plant-ings at 85 million & up from 76.1 million last year. With the USDA likely keeping its yield trend at 50.5 bu., 2020’s US crop will be at 4.25 billion bu. Given the $40 billion Chinese ag import commitment, a 1.95 bil export outlook is expected. This would put beans new-crop stocks at 473 million bu.
With wheat’s US 2020 plantings staying near 45 million acres, old-crop’s strong export demand will help shave 2020/21’s total supplies and drop wheat’s projected stocks to 825 million, the lowest level since 2014/15.

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What’s Ahead

The market will be looking closely at this week’s Ag Forum projections for insights on the US/China trade deal impact on US overseas demand. The USDA hasn’t changed their Ag Outlook levels vs. Baselines much in the past, but this year could be different. Utilize March rallies to price 10% of your corn and beans at $3.88-90 & $9.05-15 and 15% of your new-crop output at $4.00-05 & $9.30.