Friday's USDA agriculture supply and demand estimates report didn’t have many surprises, partly due to the June 30 release of USDA’s acreage report.
“It came out pretty much as expected,” said Karl Setzer, AgriVisor commodity risk analyst. “USDA incorporated in the June acreage numbers. That’s what trade was looking at: Are we going to see the big acres come in?”
Harvest area for soybeans is up 0.2 million acres from last month to 83.8 million acres. Corn harvest area is at 92 million acres, down from 97 million acres.
USDA’s 2020 corn production forecast is 995 million bushels lower due to reduced planted and harvested areas reported in the USDA June acreage report. This brings the production estimate to 15 billion bushels of corn with an average yield unchanged from June at 178.5 bushels per acre.
In comparison, soybean production is up 10 million bushels at 4.14 billion bushels with an unchanged yield forecast at 49.8 bushels per acre.
Average price estimates for corn have were raised by 15 cents to $3.35 per bushel and raised by 30 cents for soybeans to $8.50 per bushel.
Ending stocks from June to July fell 675 million bushels for corn, landing at 2.65 billion bushels due to supply declining more than use. Ending stocks rose for soybeans to 425 million bushels.
“The decrease in corn carryout was in line with what we were expecting,” said Setzer. “And the bottom line is it’s still a very high level of corn reserves. And that’s why we haven’t seen the big reaction in the futures market that we normally would. Basically, what it did is it just took us from having a burdensome carryout on corn to a higher carryout on corn. Bottom line is corn carryout is still going to increase 400 million bushels from old crop to new crop.”
Exports for 2019-20 and 2020-21 remain unchanged for both corn and beans, while corn used for ethanol was lowered 50 million bushels.
Winter wheat production was lowered by 48 million bushels to 1.22 billion. Ending stocks are projected at 942 million bushels, 17 million higher than last month. The projected season-average farm price for wheat was unchanged at $4.60 per bushel.
So, how are recent weather conditions effecting these supply and demand estimates?
“When we look at weather, we look across the United States and we have pockets where there are issues,” explained Setzer. “But when we look at the weekly crop rating, we still have a crop that is rated 71% good to excellent on corn and soybeans. That’s quite high historically.”