Grain Exchange Update
USDA officially had only bad news for corn fueled by an acreage estimate that left many questions unanswered. While the Farm Service Agency reported 11.2 million acres certified as prevent plant, the crop estimating wing of the bureaucracy said farmers planted 90 million acres, nearly 1 million more than a year ago. With yields of 169.4 bushels per acre, that put production at 13.9 billion bushels, well above the most bearish estimate in the trade. Coupled with higher old crop ending stocks due to lower ethanol usage, the increase in supply left new crop carryout at 2.181 million bushels, a huge bearish number that could get even worse if USDA’s production estimate holds true.
USDA’s numbers for soybeans were actually a bit friendly. Unlike corn, the agency cut its forecast of plantings by 3.3 million acres, matching a prevent plant total of 4.6 million. USDA kept its yield forecast unchanged at 48.5 bushels per acre, for a crop of 3.68 billion bushels. While that was 165 million bushels lower than the agency’s last forecast, it was offset by lower exports, leaving carryout still historically high.
USDA raised its forecast of wheat production much more than expected in Monday’s report, but limited the impact on the bottom line of carryout by boosting its estimate for feed usage and exports. The result was projected 2019 crop carryout of 1.014 billion bushels, 8 million above Farm Futures estimate.
Monday’s crop ratings were unchanged for both corn and beans when expectations were for 1-2% decreases. The recent hot weather did not impact the crop as expected but the numbers (57% for corn and 54% for beans) do not come anywhere close to matching the yields the USDA used in their report.
The Trump administration announced Tuesday that it will delay its announced 10% tariffs on a variety of electronic goods from China after another round of trade negotiations concluded via phone. “We’re doing this for the Christmas season, just in case some of the tariffs would have an impact on U.S. customers,” according to President Donald Trump. Some experts hope the move is a step in the right direction, showing the U.S. could be open to certain compromises amid ongoing negotiations.
This has been a tough week for everyone, we are adjusting our marketing plans for our customers by changing some open offer targets and locking in basis on contracts. Give us a call with any questions and let us help you navigate through these new marketing challenges.