close [X]

USDA Projects Lower U.S. Stocks, Higher Prices for Corn and Soybeans

Market Intel / May 10, 2018

Each year, USDA’s May World Agricultural Supply and Demand Estimates report kicks off the discussion about the new crop supply and demand balance sheets. The report is based on farmers’ planting intentions and weather-adjusted trend yield models. Given the uncertainty around planting in both the Northern and Southern hemispheres, the supply and demand projections are highly uncertain. As a result, the industry focuses most heavily on projections for ending stock levels.

For the 2018/19 marketing year – the crop currently being planted – USDA projects corn ending stocks at 1.682 billion bushels, in line with the trade estimates and down 23 percent from the 2017/18 ending stocks projection. If realized, the 2018/19 ending stocks level would be the lowest stock level in five years. Based on projections for lower ending stocks, U.S. 2018/19 marketing year average corn prices are projected to increase nearly 12 percent, or 40 cents per bushel, to $3.80.

For soybeans, USDA projects ending stocks in 2018/19 at 415 million bushels, well below the average trade guess of 535 million bushels and down 22 percent from the 2017/18 ending stocks projection. While lower year-over-year, if realized, 2018/19 soybean ending stocks would be the second-highest level on hand since the 2006/07 marketing year’s 574 million bushels. Given the projections for lower stock levels, the 2018/19 marketing year average price for soybeans was projected at $10 per bushel, up 65 cents, or 7 percent, from 2017/18.

One important surprise from the May WASDE was USDA’s projection for record-high U.S. soybean exports during 2018/19. The 2.29 billion bushel projection is up nearly 11 percent from the current marketing year. USDA’s partially bullish export projections come in the face of Chinese headwinds, including a potential 25 percent tariff on U.S.-produced soybeans. While U.S. exports are projected to grow, the U.S. market share of total soybean exports is projected at 39 percent – the lowest level since 2012/13. 

Contact:
John Newton, Ph.D.
Chief Economist
(202) 406-3729
jnewton@fb.org
 

Share This Article

Credit: Texas Farm Bureau 

Here’s what we know: Caseload statistics from the United States Courts indicate that in 2018 Chapter 12 family farmer and family fisherman bankruptcies nationwide were down from prior-year levels. Chapter 12 farm bankruptcy provides a flexible and seasonal repayment schedule, and at times may provide lower interest rates and reduce the overall debt burden.

Full Article
Credit: hedera.baltica / (CC BY-SA 2.0) 

Between the 2018 Farm Bill, USDA’s interim final rule for “Highly Erodible Land and Wetland Conservation” programs and the Environmental Protection Agency’s revised Clean Water Rule we’ve been talking a lot about wetlands. So, what do we really know about wetlands in the U.S.? Are there more or less of them? Are private property owners or state or federal governments making investments to ensure wetlands are preserved? If efforts are underway, are they working or not? To the Prairie Pothole Region, an important stop in the migratory duck flyway, we go for answers!

Full Article