USDA Reports Provide a Pessimistic Market Outlook


On March 29, 2019, USDA released the “Prospective Plantings Report”, as well as the “Quarterly Grain Stocks Report”.  These were very highly anticipated USDA Reports, due to the uncertainty in grain prices in recent months, the potential for adjustments in U.S. crop acreage in 2019, and the current status of likely increasing grain stocks in the coming year. The USDA estimates for intended 2019 U.S. corn acreage and current corn stocks came in well above the projections of most grain marketing analysts, which resulted in an initial sharp decline in the corn market prices.

Typically, these late March USDA Reports are very critical to farm operators and grain traders because the reports tend to have a high impact on grain market prices in the Spring and early Summer, as compared to later in the year. During the Spring months, many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their peak-price from April until June, which is why the late March USDA Reports are so important.

Following are some highlights from the March 29th USDA Reports:

  • Corn
    • The Planting Intentions Report indicated an estimated 92.8 million acres of corn to be planted in 2019, which is an increase of 4 percent from the 89.1 million planted acres in 2018, and surpasses the 90.2 million acres in 2017. The intended 2019 corn aces are still below the 94 million acres in 2016. The USDA corn acreage estimate was about 1.5 million acres above the average grain trade estimate of near 91.3 million acres. The highest U.S. corn acreage recorded in the March USDA estimate was 97.2 million acres in both 2012 and 2013. The 2019 corn acreage is expected to increase in Minnesota, Iowa, North and South Dakota, and Kansas, as well as in the high corn producing States of Iowa, Illinois, Indiana, and Nebraska
    • The total U.S. corn stocks on March 1, 2019, were listed at over 8.6 billion bushels, which compares to the 8.9 billion bushels on March 1, 2018. The March 1st USDA estimate was toward the high end of the grain trade estimates, which was bearish on the corn market
  • Soybeans
    • As expected, soybean acres are expected to decline significantly in 2019 from the 2018 acreage, based on the projections in the March 29th USDA Planting Intentions Report. According to the USDA report, producers will plant 84.6 million acres of soybeans in 2019, which is down 5 percent from 89.2 million acres in 2018, and is well below the from the record U.S. soybean acreage of 90.1million acres in 2017. The 2019 estimate for planted soybean acres was about 1.5 million acres lower than the average grain trade estimates. The 2019 soybean acreage is expected to decrease from the previous year by 6 percent in Minnesota, as well as to decline in most other major soybean producing States.
    • Soybean stocks on March 1, 2019, were listed at nearly 2.72 billion bushels, which up about 29 percent from 2.1 billion bushels on March 1, 2018, and is 56 percent above the 1.74 billion bushels on March 1, 2017. The March 1 soybean stocks estimate came in very near the pre-report estimates by grain traders; however, both the estimated U.S. and world soybean stocks remain at record levels, which continues to put downward pressure on soybean prices.
  • Wheat
    • Intended total U.S. wheat plantings for 2019 are 45.8 million acres, which is down 3 percent from the 2018 wheat acreage of 47.8 million acres. The 2018 U.S. wheat acreage would be the lowest in 100 years, since records began in 1919. Total wheat acreage exceeded 50 million acres as recently as 2016. Spring wheat acreage is expected to decline in Minnesota, North and South Dakota, with further acreage declines possible if Spring planting is delayed in the Upper Midwest.
    • Total wheat stocks on March 1, 2019, were listed at 1.6 billion bushels, which is up 6 percent from 1.49 billion bushels on March 1, 2018. The 2019 wheat stocks estimate was near the lower end of grain trade estimates.
  • Cotton
    • Intended U.S. cotton plantings for 2019 are estimated at 13.8 million acres, which is down slightly from 2018 acreage levels, and well-below pre-report estimates by market analysts.

The March USDA Grain Stocks Report indicated that as of March 1, 2019, there were over 5.1 billion bushels of corn and 1.27 billion bushels of soybeans stored on farms in the U.S., which represents about 60 percent of the total corn stocks and 47 percent of the total soybean stocks. According to the USDA Report, there were 730 million bushels of corn and over 103 million bushels of soybeans in on-farm storage in Minnesota on March 1, 2019. USDA does not survey the percentage of the bushels in on-farm storage that are forward priced for future delivery, as compared to bushels that are not priced. However, many private analysts feel that a much higher percentage of the corn and soybean bushels still in storage on March 1st may not be forward priced in 2019, as compared to other recent years.

On March 29, the day that the USDA Reports were released, December corn futures on the Chicago Board of Trade (CBOT) decreased by 13 cents per bushel from the market open, closing at $3.84 per bushel. Both the CBOT December corn futures price and local forward contract prices in Southern Minnesota are now near the lowest levels thus far in 2019.  Following the USDA Reports on March 29, CBOT soybean futures prices closed mixed, with the November futures price closing at $9.19 per bushel, which also is near the lowest 2019 harvest price opportunities thus far since the beginning of the year.

Most grain analysts felt the dramatic reaction in the corn market was primarily due to the surprise in the USDA planting intentions and higher grain stock estimates for corn. The USDA Report was based on planting intentions as of March 1st; however, the potential for later than normal Spring planting dates in Western Corn Belt and Upper Midwest States may cause some of the planting intentions to change in the coming weeks. Producers also continue to hope for some resolution to trade negotiations with China and other countries, which could enhance export numbers for U.S. soybeans and other crops, and thus help strengthen future grain prices.


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