USDA Report Worksheet and Weather Update
Update for September 7th, 2018
Next week on Wednesday, September 12th the USDA will issue their next supply and demand forecast. As usual various trading companies have been announcing their yield estimates prior to the USDA announcement a couple are listed here:
ALLENDALE INC. estimates the 2018 corn yield at 177.7 bushels per acre putting total production at 14.529 billion bushels. These totals are -0.7 bushels per acre and 57 million bushels lower than the USDA August numbers. For soybeans Allendale estimates the yield this year at 52.2 bushels per acre and total production of 4.636 billion bushels. This is +0.6 bushel per acre increase and a 50 million bushel bump in production above the USDA’s estimate.
INTL FCStone also estimates the 2018 corn yield at 177.7 bushels per acre which is a -0.4 bushel per acre drop from their August estimate. This adjustment moves their total production estimate to 14.532 billion bushels, 54 million bushels below the USDA August estimate. Their soybean outlook improved from last month with September’s estimate at 53.8 bushels per acre with total production of 4.782 billion bushels, this is close to 200 million bushels more than the USDA August estimate.
INFORMA in their latest estimates have set the national corn average at 178.8 bushels per acre with total production of 14.6 billion bushels. They see the U.S. soybean yield averaging 52.9 bushels per acre bringing total soy production to 4.7 billion bushels.
** IMPORTANT NOTE- If the trade were to see a yield reduction of -0.4 bushels per acre it would lower the stocks to use ratio to near 11%. If you look at past history as a guide it would lead us to believe corn futures are undervalued by $0.40.
Analysts are generally in agreement that the national corn yield will see a slight decline in next week’s report while soybean yields are expected to increase.
2018-19 USDA U.S. Yield (bu./acre)
USDA Average Range of USDA
Sep 2018-19 Trade Est. Trade Est. Aug 2018-19
Corn 177.6 174.0-180.0 178.4
Soybeans 52.3 50.9-53.8 51.6
2018-19 USDA U.S. Production (billion bu.)
USDA Average Range of USDA
Sep 2018-19 Trade Est. Trade Est. Aug 2018-19
Corn 14.516 14.225-14.750 14.586
Soybeans 4.643 4.523-4.781 4.586
2017-18 USDA U.S. Grain Carryout (billion bu.)
USDA Average Range of USDA
Sep 2017-18 Trade Est. Trade Est. Aug 2017-18
Corn 2.022 1.953-2.154 2.027
Soybeans 0.426 0.397-0.506 0.430
2018-19 USDA U.S. Grain Carryout (billion bu.)
USDA Average Range of USDA
Sep 2017-18 Trade Est. Trade Est. Aug 2017-18
Corn 1.614 1.210-1.785 1.684
Soybeans 0.828 0.722-1.000 0.785
Wheat 0.949 0.885-1.077 0.935
2017-18 USDA World Grain Carryout (million tons)
USDA Average Range of USDA
Sep 2017-18 Trade Est. Trade Est. Aug 2017-18
Corn 192.0 188.0-193.8 193.3
Soybeans 95.5 94.0-97.2 95.6
2017-18 USDA World Grain Carryout (million tons)
USDA Average Range of USDA
Sep 2017-18 Trade Est. Trade Est. Aug 2017-18
Corn 154.3 152.0-159.0 155.5
Soybeans 107.3 104.0-111.1 105.9
Wheat 257.4 252.0-261.4 259.0
One important factor to consider in addition to the findings of the well-respected trading groups is the extent of “Excellent” ratings in the USDA weekly crop conditions report. There are some bearish traders that look for an increase in the national yield closer to 180 bushels per acre. When last year’s crop ratings are compared to this year’s ratings we see a considerable improvement over last year especially in the big production states and in the most significant “excellent” category rating. Here are a few of the notables:
Illinois is rated at 30% Excellent vs 11% last year.
Indiana is 19% Excellent vs 11% a year ago.
Iowa 21% Excellent vs 9% last year.
Minnesota has 26% rated Excellent vs 16% a year ago.
Ohio is 22% Excellent vs 13% in 2017.
North Dakota has 16% rated Excellent vs 4% last year.
South Dakota is 20% Excellent vs just 4% a year ago.
Soybeans continue to face a steep uphill battle and likely will for some time to come. There is more confidence in the market that the USDA will raise their estimated yield perhaps moving the expected average close to 53 bushels per acre. Another round of tariffs on Chinese goods may be on the horizon and reports show that the Chinese are working tirelessly to reduce some of their demand for soybean meal. The social and political unrest that is occurring in both Argentina and Brazil may lead to further difficulties in getting soy out of the ports for both of the South American countries. Basis here in U.S. has become a major issue with the average basis bid across the country now at $0.50 under NOV18 with an average cash price of $7.85 per bushel. (Some areas of the Dakota’s producers are dealing with sub $7.00
How long can China hold on without sourcing larger doses of U.S. soybean supplies? There are several different ideas with some insiders saying late-November to mid-December while others believe they have created other options and can possibly wait until late-February to mid-March. Reuters reports that a high-level exec at a top soybean crusher in China says that they will almost entirely replace U.S. soybean imports from Brazil and other sources in the upcoming season.
The graph below is from INTL FCStone. It shows the cost of U.S. soybeans vs Brazilian soybeans for delivery to China. The graph includes the tariffs and taxes as they applied prior to July 6th and after July 6th which include a 28% tariff and 10% value added tax on the FOB value on the U.S. beans.
UPDATE The payments for the Market Facilitation Program that will provide direct payments to assist producers of corn, cotton, sorghum, soybeans, wheat as well as dairy and hog farmers that have been impacted by retaliatory tariffs began signup this week. All farmers that plan to apply for payments must do so prior to January 15th, 2019. Farmers will be required to certify their final yield before receiving a check under this program. For more information about the MFP program, visit www.farmers.gov/MFP or contact your local FSA office.
Normally the weathers influence in the grain markets has mostly ended by this point of the growing season. However, last weekend and early this week a stationary front across the Midwest dumped 3-5” of rain on two-thirds of Iowa and half of Wisconsin with some areas receiving in excess of 8-10” of rain causing flooding in many areas. Now attention turns to the southern and eastern Corn Belts as moisture from Tropical Storm Gordon is expected to bring heavy rainfall through the coming weekend to these areas. The tropical system is forecast to cause flooding across Missouri, Illinois and into the Ohio Valley bringing upwards of 6 inches of rainfall. The Upper Midwest and Plains are expected to receive some much needed dry weather.
