Pre-USDA Ag Forum S&D Ideas - Given China’s Purchases, Will The USDA Change Their 2021 Acres?

Market Analysis

The USDA normally issues economic derived supply-demand forecasts for the major U.S. crops at its annual Agricultural Outlook Forum. This year’s event is being held virtually on February 18 & 19. The USDA’s Chief Economist Seth Meyer will provide some basic 2021 details during his AM remarks on the 18th, while the complete balance sheets will be released on Friday AM.
2020’s late-season US dryness & China’s Phrase 1 grain & oilseed purchases have dramatically tightened US major crop’s balance sheets & upped prices in the past 8 months. The question ahead of the Ag Forum will the USDA up their 2021 planting ideas above their initial outlooks of last fall. With prices at 7-to 8-year highs, the further expansion of US plantings seems logical given our large prevent plant acres.
Each fall, the USDA issues an economic update for Congress called the Baseline Projections that forecasts 10-year balance sheets for the major crops as part of their annual Farm Bill duties. Because of last fall’s strong Chinese beans purchases, the USDA decreased corn’s 2021 seeding by 1 million acres to 90 million in their forecast. However, a smaller final US crop size and China’s recent hefty 5.8 mmt in exports have advanced corn prices to their 2013 level. This suggests corn’s planting could increase to 92.5 million acres in the USDA update. The other crop output factor is yield. Given the 2020s 172 bu level, corn’s yield trend for 2021 looks near 177 bu vs last fall’s 180.5 level which will be big factor in corn’s US supply.
Last fall’s higher US prices & the likelihood of 6.1 million acres of N. Plains and Mid-South prevent planting acres coming back into the US plantings prompted the USDA to up soybeans seeding to 89 million acres. Higher prices, corn on corn yield drag, and Deracho weed control could advance the US bean area to 90.5 million. The USDA will likely keep its US yield trend near 50.5 bu.
Last fall’s 1.58 million larger winter wheat seedings and a possible 1.7% (230,000 acres) drop in US spring plantings could put the US seedings at 45.7 million later this week.

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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