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

USDA-WASDE FORECAST #596 January 10th 2020

01/10/2020

OVERVIEW

Predictably the January 10th 2020 USDA WASDE Report was updated from December with more accurate yields for corn and soybeans but with relatively unaltered price projections for these commodities.

 

Corn and soybean harvests reflected in the January 2020 WASDE are based on actual yield and harvested area. The corn acreage harvested was 81.5 million acres, 0.4 percent down from the December 2019 WASDE (81.8 million in 2018). Soybeans were harvested from 75.0 million acres, 0.8 percent down from the December 2019 WASDE. (88.3 million acres in 2018)

 

The January 2020 WASDE projected corn yield was raised by 0.6 percent to 168 bushels per acre, (178.9 bushels in 2018). The relatively low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was raised 1.1 percent to 47.4 bushels per acre from the December 2019 WASDE, (52.1 bushels in 2018).

 

The November USDA projection for the ending stock of corn was lowered 0.9 percent to 1,892 million bushels. Ending stock for soybeans will be unchanged from the December estimate at 475 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with conflicting reports on trade negotiations with China. It is presumed that projections are based on the assumption that there will be continued trade in accordance with the Phase-1 agreement on trade with China in 2020. Some orders representing four percent of projected 2019 exports of soybeans were forthcoming in September after the August G-7 Summit in France. In mid-September, China rescinded a ban on all agricultural imports from the U.S. imposed on August 4th. This followed the announcement of a delay in introducing a September 1st threatened tariff of 10 percent on imports from China valued at $300 billion not already subject to duty.

 

To date there has been no announced commitment on either volumes or prices of commodities to be imported by China in 2020.

 

CORN

The corn harvest for 2019 documented in the January 2020 WASDE Report #596 was projected to be 13,692 million bushels consistent with acreage planted, crop progress and estimated yield. The projection for the 2019 new crop can be compared to the 2018 harvest of 14,420 million bushels and is down 10.1 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained from December at 5,375 m. bushels despite the prospect of year-round use of E-15 but eroded by Small Refinery Exemptions and reduced domestic demand for E-10. Exports were lowered by 4.1 percent to 1,775 million bushels taking into account intense competition from Brazil and Argentine and increased World domestic coarse grain production relative to demand. The "Feed and Residual" category was raised to 5,525 million bushels. Ending stocks were lowered 0.9 percent to 1,892 m. bushels.

The forecast USDA farm price was unchanged from December at 385 cents per bushel. At close of trading on January10th after release of the WASDE the CME quotations for January and May 2020 corn were 386 cents and 393 cents per bushel respectively.

JANURY 2020 WASDE #596 ESTIMATES FOR THE 2019 CORN HARVEST:

Harvest Area

81.5 m acres

(89.7 m. acres planted, corresponding to 90.8% of acres harvested)

Yield

168.0 bushels per acre

(was 167.0 bushels per acre in December WASDE.)

Beginning Stocks

2,220 m. bushels

 

Production

13,692 m. bushels

 

Imports

50 m. bushels

 

Total Supply

15,962 m. bushels

Proportion of Supply

Feed & Residual

5,525 m. bushels

34.6%

Food & Seed

1,395 m bushels

8.7%

Ethanol & Byproducts

5,375 m. bushels

33.7%

Domestic Use

12,295 m. bushels

77.0%

Exports

1,892 m. bushels

11.1%

Ending Stocks

1,910 m. bushels

11.9%

Stock-to-domestic use proportion

15.4%

(Was 15.8 % in the December 2019 WASDE Report)

 

Average Farm Price: $3.85 per bushel. (unchanged from the December 2019 WASDE Report)

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 3,558 million bushels, almost unchanged from the December 2019 WASDE estimate, based on a yield of 47.4 bushels per acre, up 1.1 percent from the December projection. Use parameters were slightly changed from the December 2019 WASDE Report with crushings at 2,105 m. tons. Projected exports were retained at 1,775 million bushels, presumably anticipating resolution of the trade conflict with China during 2020. The export projection appears speculative despite signing of a Phase-1 agreement with China. The U.S. identified and supplied new alternative markets to China in 2019. It is ironic that some of this volume is probably transshipped to China. In recent years our largest trading partner imported the equivalent of 25 percent of U.S. soybeans. Ending stocks were adjusted to 475 million bushels.

The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 990 cents per bushel, up 15 cents per bushel from the December WASDE estimate. At close of trading on January10th following release of the WASDE the CME quotations for soybeans for January and May 2020 delivery were 935 cents and 958 cents per bushel.

Projected output of soybean meal was held at 49.5 million tons. Domestic use was raised to 36.8 million tons. Exports were lowered to 13.2 million tons despite an uncertain trade environment. The USDA reduced the ex plant price of soybean meal by $5 per ton from the December WASDE to $305 per ton. At close of trading on January 10th CME quotations for January and May 2020 deliveries of soybean meal were $299 and $308 respectively.

JANUARY 2020 WASDE #596 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area

75.0 m acres

(76.1 m. acres planted, harvest corresponding to 98.0% of planted acreage)

Yield

47.4 bushels per acre

(Was 46.9 bushels per acre in December 2019)

Beginning Stocks

909 m. bushels

(Was 1,005 m. bushels in December WASDE)

Production

3,558 m. bushels

 

Imports

15 m. bushels

 

Total Supply

4,482 m. bushels

Proportion of Supply

Crushings

2,105 m. bushels

47.0%

Exports

1,775 m bushels

39.6%

Seed

96 m. bushels

2.1%

Residual

32 m. bushels

0.7%

Total Use

4,008 m. bushels

89.4%

Ending Stocks

475 m. bushels

10.6% (Was 470 m. bushels in December WASDE)

 

Average Farm Price: 900 cents per bushel (Up 15 cents per bushel from the December WASDE Report)

 

Soybean Meal

Beginning Stocks

0.402 m. tons

Production

49.498 m. tons

Imports

0.500 m. tons

Total Supply

50.400 m. tons

Domestic Use

36.800 m. tons

Exports

13.200 m. tons

Total Use

50.000 m. tons

Ending Stocks

0.400 m. tons

 

Average Price ex plant : $305 (Down $5 per ton from the December WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

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

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

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

o 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:-

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

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

 

WORLD SITUATION

Updated World production and use of total grains and oilseeds is summarized for the 2019/2020 season taking into account Northern and Southern Hemisphere production:-

Factor: billon m. tons

Coarse Grains

Oil Seeds

Output

1.402

575

Supply

1.749

703

World Trade

201

172

Use

1.421

497

Ending Stocks

328

112

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


 
Copyright 2019 Simon M. Shane