Update for June 12th, 2019
The USDA surprised traders with smaller than expected production numbers in this week’s report. U.S. planted corn acres saw a -3 million acre reduction down to 89.8 million but the biggest surprise was the estimated corn yield which saw a massive 10 bushels per acre reduction from 176 to 166 bushels per acre. Traders had not anticipated such a substantial cut this soon and were guessing the USDA estimated yield would come in closer to 171.7 bushels per acre. Total demand was lowered by -425 million bushels, comprised of a -300 million bushels decrease in feed and residual demand and -125 million bushels decrease in exports. New-crop ending stocks were reduced by -810 million bushels to 1.675 billion, if this happens it will be the lowest ending stock number since 2013/14. The season average farm price for corn was raised by $0.50 to $3.80 per bushel.
Soybean estimates saw little adjustment from previous reports as the new-crop planted acres and yield were left unchanged. Ending stocks for soybeans were raised by +75 million bushels from 970 million to 1.045 billion. The season average farm price for soybeans was increased by $0.15 to $8.25 per bushel which was raised to reflect the influence of the higher corn prices. Global production was reduced by -0.30 million tons to 355.4 million due to the drop in production in Ukraine and Zambia and global ending stocks also were lowered by -0.4 million tons.
Monday’s Crop Progress report showed the slowest U.S. corn planting and emergence pace on record! They reported that 83% of the nation’s corn crop has been planted which is -8% behind the next slowest year of 1995, and 62% emerged vs the next slowest rate of 85% in 2013. This means that as of June 10th, 17% or 15.7 million corn acres are still unplanted. Soybean progress is also near record low levels. The report showed that 60% of the U.S. soybean crop is currently planted. The only years with slower progress were 1981, 1995 and 1996 which all tied for first at 59% complete. Soybean emergence is the slowest on record with only 34% emerged.
The charts shown are supply and demand estimates assembled by analysts using various acre and yield totals. Many analysts are using numbers similar to those shown in the Bull column.
While the ending stocks of corn are predicted to decrease dramatically from this fall to next the supply is still quite large.
The current supply of U.S. soybean stocks is big and the expectation is that the supply will still be large next fall.
U.S. Agriculture Secretary Sonny Perdue issued a statement Monday regarding trade-related assistance and disaster relief that will hopefully answer a few questions …
“Whether it’s because of natural disasters or unfair retaliatory tariffs, farmers across the country are facing significant challenges and tough decisions on their farms and ranches. Last month, immediately upon China reneging on commitments made during the trade talks, President Trump committed USDA to provide up to $16 billion to support farmers as they absorb some of the negative impact of unjustified retaliation and trade disruption. In addition, President Trump immediately signed into law the long-awaited disaster legislation that provides a lifeline to farmers, ranchers, and producers dealing with extensive damage to their operations caused by natural disasters in 2018 and 2019.
Given the size and scope of these many disasters, as well as the uncertainty of the final size and scope of this year’s prevented planting acreage, we will use up to $16 billion in support for farmers and the $3 billion in disaster aid to provide as much help as possible to all our affected producers.
I have been out in the country this spring and visited with many farmers. I know they’re discouraged, and many are facing difficult decisions about what to do this planting season or if they’ve got the capital to stay in business, but they shouldn’t wait for an announcement to make their decisions. I urge farmers to plant for the market and plant what works best on their farm, regardless of what type of assistance programs USDA is able to provide.
In the coming weeks, USDA will provide information on the Market Facilitation Program payment rates and details of the various components of the disaster relief legislation. USDA is not legally authorized to make Market Facilitation Program payments to producers for acreage that is not planted. However, we are exploring legal flexibilities to provide a minimal per acre market facilitation payment to folks who filed prevent plant and chose to plant an MFP-eligible cover crop, with the potential to be harvested and for subsequent use of those cover crops for forage.”
Finance leaders from G20 countries met this past weekend in Japan and came to the conclusion that geopolitical and trade issues have been increasing world-wide. During the course of the meeting U.S. Treasury Secretary Steve Mnuchin and the head of China’s central bank, Yi Gang, were rumored to have spoken briefly. Speculation continues that President Trump and Chinese president Xi will be meeting at the end of this month at the G20, perhaps the two leaders will be able to establish a workable path forward and can head-off further sanctions. U.S. officials are currently preparing to expand tariffs to 25% on $300 billion of Chinese products. A two week extension was recently granted to Chinese exporters to allow them additional time to get their products shipped before the additional tariffs go into effect.
A wetter pattern is forecast to return to the Midwest later this week. The National Weather Service is predicting 2 to 4 inches of rainfall in the eastern Corn Belt, and Missouri along with portions of Kansas and Oklahoma. The rest of the nation’s midsection should see at least an inch of rainfall by the middle of next week.
The longer range 8-15 day outlook forecasts extremely wet conditions starting next Wednesday and lasting through the 26th. Most of the Corn Belt can expect to receive at least 2.5 inches of rain and as much as 5 inches are likely in some areas. If the long-range models are correct some of the heaviest rainfall will fall in central Illinois and will likely put an end to the U.S. planting season.