USDA-WASDE FORECAST #583 November 8th 2018

11/08/2018

OVERVIEW

The October 11th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress with monitoring by "scouts", recorded crop progress and the fact that 70 percent of the new-crop corn and 87 percent of soybeans have been harvested. The acreage for corn was retained from the July through October projections at 81.8 million acres (83.1 million in 2017). Soybeans will be harvested from 88.3 million acres (89.5 million acres in 2017).

The USDA lowered corn yield by 1.0 percent to 178.9 bushels per acre from the October WASDE (175.4 bushels in 2017). Soybean yield was reduced by 1.9 percent from October to 52.1 bushels per acre (49.5 bushels in 2017).

The November USDA projection of ending stock for corn was lowered by 4.4 percent to 1,736 million bushels. Ending stock for soybeans was raised 7.7 percent to 955 million bushels resulting in predictable declines in CME quotations.

The 2018 corn and soybean crops will be the second largest ever but will be harvested during a time of uncertainty regarding previously projected, anticipated and actual export volumes. The USDA projections of ending stocks and hence prices for corn and soybeans take into account current announced tariffs on U.S. products but do not reflect tariffs or unlikely resolution of the trade conflict with China.

CORN

The projection of the corn harvest was reduced 1.0 percent from the October WASDE Report to 14,626 million bushels consistent with the reality that 76 percent has been harvested. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down only 3.4 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained at 5,650 m. bushels and exports were lowered 25 m bushels to 2,450 million bushels. "Feed and Residual" was unchanged at 5,550 million bushels. Ending stocks will decrease 4.2 percent to 1,736 m. bushels. The projected USDA range in farm price was raised on the low end to a range to 320 to 400 cents per bushel. At 16H00 on November 8th CME quotations for December 2018 and March 2019 corn were 373 cents and 385 cents per bushel respectively.

NOVEMBER 2018 WASDE #583 ESTIMATE FOR THE 2018 CORN HARVEST:

Harvest Area 81.8 m* acres (89.1 m. acres planted, corresponding to 91.8 % of area harvested)
Yield 178.9 bushels per acre (was175.4 bushels per acre in 2017, 180.7 bushels Oct. WASDE)
Beginning Stocks 2,140 m. bushels
Production 14,626 m. bushels
Imports 50 m. bushels
Total supply 16,816 m bushels Proportion of Supply
Feed & residual 5,550 m. bushels 32.7%
Food & Seed 1,480 m. bushels 8.8%
Ethanol & byproducts 5,650 m. bushels 33.6 %
Domestic Use 12,630 m. bushels 75.1%
Exports 2,450 m. bushels 14.6%
Ending Stocks 1,736 m. bushels 10.3%

Stock-to- domestic use proportion 13.7% (Was 14.3% in the October 2018 WASDE Report)
Average Farm Price: $3.20 to $4.00 per bushel . (Up 20 cents per bushel on the low end from the October 2018 WASDE)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA reduced the projection of the soybean harvest by 1.9 percent from the October WASDE Report to 4,600 million bushels due to a downward revised yield of 52.1 bushels per acre. Use parameters were essentially unchanged from the October 2018 WASDE Report with crushing at 2,080 m. tons. Projected exports were reduced to 1,900 million bushels following an anticipated decline due to retaliatory tariffs imposed by China. This figure appears optimistic given that China ceased imports in July 2018 and this nation is usually responsible for an offtake equivalent to 25 percent of production. Ending stocks were increased by 7.9 percent (over the 4.7 percent reduction forecast in October) to 955 million bushels. The USDA projection of the ex-farm price for soybeans for the 2018 harvest was narrowed from October to a range of 760 cents to 960 cents per bushel. At 16h00 on November 8th CME quotations for soybeans for November 2018 and March 2019 delivery were 867 cents and 891 cents per bushel respectively.

Projected output of soybean meal was increased from the October 2018 WASDE to 49.15 million tons. Domestic use was raised to 35.85 million tons. Exports were raised to 13.75 million tons despite an uncertain trade environment. The USDA held the projection of soybean meal prices over a range of $290 to $330 per ton. At 16H00 on November 8th CME quotations for December 2018 and March 2019 deliveries of soybean meal were $306 and $310 respectively.

NOVEMBER 2018 WASDE #583 ESTIMATE FOR THE 2018 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 88.3 m. acres (89.1 m. acres planted, corresponding to 99.0% of planted acreage )
Yield 52.1 bushels per acre (was 49.5 bushels/acre in 2017, 53.1 bushels on October WASDE)
Beginning Stock  438m. bushels  
Production 4,600m bushels  
Imports 25m. bushels  
Total Supply 5,063m bushels Proportion of Supply
Crushings 2,080m. bushels 41.1%
Exports 1,900m. bushels 37.5% (was 2,060 bushels in October WASDE)
Seed 96m. bushels 1.9% (was 103m bushels in October WASDE)
Residual 32 m. bushels 0.6%
Total Use 4,107 m. bushels 81.1%
Ending Stocks 955 m. bushels 18.9% (was 885m bushels in October WASDE)

Average Farm Price: 760 to 960 cents per bushel (Up 25 cents on the low end and down 25 cents on the high end from the October 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 Stock 0.450 m. tons

Average Price ex plant : $290 to $330 per ton (Unchanged since the Sept. 2018 WASDE Report)

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

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 1.373 600
Supply 1.743 715
World Trade 201 180
Use 1.409 498
Ending Stocks 334 126

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


















































































































































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