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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

USDA-WASDE FORECAST #585 February 8th 2019

02/08/2019

OVERVIEW

The February 8th 2018 USDA WASDE projections for the 2019 corn and soybean harvests are based on historical yield and harvest data. The corn acreage to be harvested was determined from planting intentions to be 81.7 million acres (81.8 million in 2018). In 2019 soybeans will be harvested from 88.1 million acres (88.3 million acres in 2018).

The USDA projected corn yield to attain 176.4 bushels per acre, (178.9 bushels in 2017). Soybean yield was projected at 51.6 bushels per acre (52.1 bushels in 2018).

The February USDA projection of ending stock for corn was reduced by 2.6 percent to 1,735 million bushels. Ending stock for soybeans will be 4.7 percent lower at 910 million bushels with minimal effect on CME price quotations subsequent to the noon release of the February WASDE.

It is emphasized that projections are based on the presumption of at least a partial settlement of the trade dispute with China with restoration of exports to that Nation.

CORN

The projection of the corn harvest for 2019 was established in the WASDE Report to attain 14,420 million bushels consistent with current planting intentions. The projection for 2019 can be compared to the 2018 harvest of 14,420 million bushels and is down 4.8 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was raised 25 million bushels to 5,575 m. bushels but exports were retained at 2,450 million bushels. The "Feed and Residual" category was downgraded to 5,375 million bushels. Ending stocks will decrease 2.6 percent to 1,735 m. bushels. The projected USDA range in farm price was narrowed with retention of the midpoint to a range to 335 to 385 cents per bushel. At close of trading on February 8th CME quotations for March 2019 and May 2019 corn were 374 cents and 382 cents per bushel respectively, both within 1 cent per bushel of the trade levels on December 11th.

FEBRUARY 2019 WASDE #585 ESTIMATE FOR THE 2019 CORN HARVEST:

Harvest Area 81.7 m* acres (89.1 m. acres planted, corresponding to 91.6 % of area harvested)

Yield 176.4 bushels per acre (was175.4 bushels per acre in 2017, 178.9 bushels per acre 2018)

Beginning Stocks 2,140 m. bushels

Production 14,420 m. bushels

Imports 40 m. bushels

Total supply 16,600 m bushels Proportion of Supply

Feed & residual 5,375 m. bushels 32.3%

Food & Seed 1,465 m. bushels 8.8%

Ethanol & byproducts 5,575 m. bushels 33.6 %

Domestic Use 12,415 m. bushels 74.7%

Exports 2,450 m. bushels 14.8%

Ending Stocks 1,735 m. bushels 10.5%

Stock-to- domestic use proportion 13.9% (Was 14.2% in the December 2018 WASDE Report)

Average Farm Price: $3.35 to $3.85 per bushel . (Up 10 cents per bushel on the low end and down 10 cents per bushel on the high end compared to the December 2018 WASDE)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean harvest to be 4,544 million bushels based on a yield of 51.6 bushels per acre. Use parameters were essentially unchanged from the December 2018 WASDE Report with crushings at 2,090 m. tons. Projected exports were lowered 1.3 percent to 1,875 million bushels presumably in anticipation of a resolution of the trade conflict with China. This figure appears speculative given that negotiations against a deadline of March 1st are still in progress. China ceased imports in July 2018 and this nation is usually responsible for an offtake equivalent to 25 percent of U.S. production. Ending stocks were adjusted down to 910 million bushels. The USDA projection of the ex-farm price for soybeans for the 2019 harvest was narrowed from December 2018 to a range of 810 cents to 910 cents per bushel. At close of trading on February 8 th CME quotations for soybeans for March 2019 and May 2019 delivery were 916 cents and 930 cents per bushel respectively, higher by 0.3 percent compared to midpoint quotations in December.

Projected output of soybean meal was increased from the December 2018 WASDE to 49.2 million tons. Domestic use was held at 35.85 million tons. Exports were retained at 13.75 million tons despite an uncertain trade environment. The USDA raised the projection of soybean meal prices over a range of $295 to $335 per ton. At close of trading on February 8th CME quotations for March 2019 and May 2019 deliveries of soybean meal were $307 and $311 respectively.

FEBRUARY 2019 WASDE #585 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 88.1 m. acres (89.2 m. acres planted, corresponding to 98.8% of planted acreage)

Yield 51.6 bushels per acre (was 49.5 bushels/acre in 2017, 52.1 bushel/acre in 2018)

Beginning Stock 438m. bushels

Production 4,544m bushels

Imports 20m. bushels

Total Supply 5,002m bushels Proportion of Supply

Crushings 2,090m. bushels 41.8%

Exports 1,875m. bushels 37.5%

Seed 96m. bushels 1.9%

Residual 31 m. bushels 0.6%

Total Use 4,092 m. bushels 81.8%

Ending Stocks 910 m. bushels 18.2% (was 955m bushels in December WASDE)

Average Farm Price: 810 to 910 cents per bushel (Up 25 cents on the low end and down 25 cents on the high end from the December 2018 WASDE Report)

Soybean Meal

Beginning Stocks 0.553 m. tons

Production 49.147 m. tons

Imports 0.350 m. tons

Total Supply 50.050 m. tons

Domestic Use 35.850 m. tons

Exports 13.750 m. tons

Total Use 49.600 m. tons

Ending Stocks 0.450 m. tons

Average Price ex plant : $295 to $335 per ton (Up $5/ton on both ends of the December 2018 range)

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest stable to slightly increased production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic use and exports.

  • For each 10 cents per bushel change in corn:-

  • The cost of egg production would change by 0.45 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound

  • For each $10 per ton change in the cost of soybean meal:-

  • The cost of egg production would change by 0.40 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound.

 

WORLD SITUATION

Soybean production was depressed by drought in Brazil (-4.2 percent), Argentine, South Africa and the Ukraine. Mexico and South Africa are expected to import more corn in 2019.

Updated World production and use of total grains and oilseeds is summarized for the 2017/2018 season taking into account Northern and Southern Hemisphere production are:-

Factor m.tons. Coarse grains Oilseeds

Output 1.372 593

Supply 1.742 707

World trade 201 178

Use 1.405 495

Ending stocks 337 121

(1 metric ton corn= 40 bushels) ("ton" represents 2,000 pounds)


 
Copyright 2019 Simon M. Shane