USDA Report Worksheet and Extreme Weather
Update for April 11th, 2019
There were really no big surprises in Tuesdays USDA numbers. Some of the notable adjustments:
CORN
Ending stocks were raised by +200 million bushels to 2.035 billion bushels.
Corn used for feed and residual use was reduced by -75 million bushels to 5.300 billion.
Corn used for ethanol production fell by -50 million bushels to 5.500 billion.
Exports were lowered by -75 million bushels to 2.300 billion. This figure has already factored in current outstanding orders as well as increasing competition from South American countries and Ukraine.
Global stocks for 2018/19 were raised by +5.3 million tons to 1.3772 billion.
Production estimates were raised for Brazil’s second-crop corn crop due to an anticipated increase in yields. The estimate was also raised for Argentine production due to an anticipated increase in acres.
Corn production is also expected to increase in the EU, Mexico and Indonesia.
Export expectation for Brazil, Argentina, the EU and Ukraine were all raised offsetting the reduction in U.S. corn exports.
SOYBEANS
Demand for U.S. soybeans saw a slight increase.
Exports and domestic crush numbers were “unchanged”.
Imports were lowered from 20 million to 17 million.
Soybean ending stocks were moved marginally lower with a -5 million bushel decrease from 900 million bushels to 895 million.
Global soybean production was raised by +2 million tons to 595 million tons mainly due to higher soybean production in Brazil which was raised +0.5 million tons to 117.0 million and an increase in rapeseed production in India of +1.4 million tons to 8 million tons. No change was made to Argentine soybean production which was left unchanged at 55 million.
U.S. 2018/19 Ending Stocks (in Billion Bushels)
Avg. Trade USDA
April Est. Trade Est. Range Mar 2019
Corn: 2.035 1.999 1.870 - 2.211 1.835
Soybeans: 0.895 0.903 0.825 - 1.062 0.900
Wheat: 1.087 1.075 1.045 - 1.103 1.055
World 2018/19 Ending Stocks (in Million Metric Tons)
Avg. Trade USDA
April Est. Trade Est. Range Mar 2019
Corn: 314.01 311.3 106.2 - 114.6 107.2
Soybeans: 107.36 108.3 0.825 - 1.062 0.900
Wheat: 275.61 270.9 268.5 - 274.2 270.5
South American Production (in Million Metric Tons)
Avg. Trade USDA
April Est. Trade Est. Range Mar 2019
Brazil Corn: 96.0 94.7 88.5 - 97.0 94.5
Brazil Soybeans: 117.0 116.2 114.5 - 119.0 116.5
Argentina Corn: 47.0 46.6 45.2 - 48.0 46.0
Argentina Soybeans: 55.0 55.4 54.0 - 57.0 55.0
Extreme weather across key U.S. growing regions is delaying the start of spring fieldwork with several inches of additional moisture falling in areas already saturated and flooded. Market bulls have been hoping that this spring storm would help convince the markets to move higher in response but with all the new technology used in agriculture today, it’s estimated that U.S. producers are able to plant 30% to 40% of the entire nation’s corn crop in just one week’s time. There is also rising concern that the USDA may deliver yet another round of cuts. Feed and residual demand is expected to receive an additional reduction as well as exports and ethanol which also may see a slight cut. It’s not all bad news though, ethanol data out yesterday indicated margins are starting to improve, weekly output has pushed back above +1 million barrels per day and current stock numbers were trimmed by almost -800,000 barrels. There are new rumors that the Chinese are considering dropping their anti-dumping probe into U.S. DDGS. Talk continues that China is closer to purchasing U.S. corn, ethanol and DDGS in response to part of the trade compromise.
Weather issues keeping producers from planting corn may in turn be raising total soybean acreage for 2019. Demand appears to be mostly steady with the crush and export data unchanged in the USDA report. China has been in the market purchasing small quantities of U.S. soybeans but that may change as South America’s soybean supply is moving into the ports for shipping and Argentina crushers are becoming more aggressive with pricing.
The ninth round of trade talks were held last Thursday as President Trump, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer met with China’s Vice Premier Liu He at the White House. There are still major sticking points with intellectual property theft and tariffs that remain and need to be worked through but we have agreed to far more than is left to agree to. President Trump stated, “We’ve had tremendous discussions. We’re very close to making a deal. That doesn’t mean a deal is made because it’s not, but we’re certainly getting a lot closer and I would think, within the next four weeks or maybe less, maybe more, whatever it takes, something very monumental could be announced.” U.S. Treasury Secretary Mnuchin said that the two sides have largely agreed on how to enforce any trade agreements that are reached. “We’ve pretty much agreed on an enforcement mechanism, we’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters.” The enforcement of the final trade agreement is a vital component to the success of any agreement moving forward. U.S. negotiators have stressed the necessity for such a safety net from the beginning, so this is an important accomplishment from the latest talks.
Vice President Pence recently told Indiana farmers during a USMCA promotion tour that the White House is working to have Congress ratify USMCA this spring. The President of Mexico has said that he will ensure his nation’s Senate will overhaul the labor laws to enforce workplace standards, which has been a major stumbling block for the U.S. The USMCA week-long promotion tour includes stops in agriculture regions across Ohio, Virginia, Pennsylvania, Minnesota and other 2020 battlegrounds. (Politico)
In an “abundance of caution” the National Pork Producers Council has cancelled the World Pork Expo which was scheduled to take place at the Iowa State Fairgrounds in June. Nearly 20,000 visitors from 40 countries worldwide typically attend the expo. Evaluations from veterinarians and other experts concluded there was a very small risk associated with holding the event but the NPPC is doing all it can to prevent the spread of African Swine Flu to the U.S. NPPC President David Herring stated, “The health of the U.S. swine herd is paramount; the livelihoods of our producers depend on it. Prevention is our only defense against ASF and NPPC will continue to do all it can to prevent its spread to the United States.” China has been at the epicenter of the ASF and have been battling the further spread of the deadly disease for several months, it has been estimated that Chinese producers have already lost the equivalent of the entire U.S. hog population, and there still is no end in sight.
Since November 1st many areas in the central and northern portions of the U.S. have received some of the top 10 wettest conditions on record for the past 127 years. In the map below conditions are indicated by a range of colors with the shades running from driest (at the top in brown) to the wettest (dark green at the bottom).
The winter weather system making its way across the U.S. has intensified into a major blizzard over the Plains where it may set April pressure and all-time snowstorm records. Over 3.9 million residents of the Plains and Midwest are being affected by this rare inland spring snowstorm which has slammed parts of Wyoming, Colorado, Kansas, Nebraska, South Dakota, Minnesota, Iowa and Wisconsin so far. Weather experts remain split as to whether or not winter storm Wesley has met the scientific definition of a “bomb cyclone” or “bomb genesis”. According to NOAA, a bomb cyclone occurs when a cold air mass collides with a warm air mass causing the atmospheric pressure to drop 24 millibars in less than 24 hours. But as NOAA Weather Prediction Center senior forecaster David Roth noted an adjustment in latitude would move Wesley into that category. If it is classified as a bomb cyclone it would be the second hit to the region in less than a month. Snowfall totals in parts of South Dakota and southwestern Minnesota are expected to reach over 20 inches with some localized areas expected to receive over 30 inches of snow.
