Home Online Banking Products and Services Deposit Rates Calculators About Us Contact Us Help Weather Futures Market News Headline News DTN Ag Headlines Portfolio
- DTN Headline News
USDA Reports Preview
Monday, August 12, 2019 7:59AM CDT
By Todd Hultman
DTN Lead Analyst

With USDA ready to release the results of its second planting survey, all eyes will be on what should be the first credible corn crop estimate of 2019. Soybeans and wheat will have their own new numbers to consider, but the corn estimate has the most potential for surprise and may also influence Monday's soybean and wheat prices.

CORN

If you recall USDA's previous attempt at estimating corn plantings back on June 28, USDA explained that 83% of the intended corn crop was planted in early June when the first survey was being taken. In other words, roughly 77.0 million acres (ma) of corn were planted in early June and 15.8 ma were still unplanted.

What was not well explained was how USDA came to believe 91.7 ma of corn would be planted in 2019, especially as rain afflicted the soggy Eastern Corn Belt well into June. Monday's World Agricultural Supply and Demand Estimates (WASDE) report will factor in a second planting survey of 14 states and should give us a more accurate assessment of how many corn acres were actually planted this year.

At the same time the WASDE report is being released at 11 a.m. CDT, USDA's Farm Service Agency will release its first estimate of prevented plantings for 2019. That will also be interesting to see, especially in this unusual year of excessively wet planting weather, muddied by a federal promise of trade aid that was largely unexplained while fields were being planted.

For those keeping score at home, it is important to remember USDA's July planting estimate total for corn, soybeans and wheat of 217.3 million acres is already 8.8 million acres below the 2018 estimate. That leaves a lot of room for prevented plantings already being factored in and may have added to some of the public confusion about estimating this year's planting total.

Make no mistake, the number of prevented acres will be interesting, but the real key for corn prices moving forward will be the WASDE planting estimate -- not the prevented plantings total.

Yield is the other half of the equation for reaching a crop estimate. While USDA may slightly adjust its corn yield estimate Monday, the new estimate won't mean much until USDA provides the first field based survey on September 12.

In a rare unanimous vote, all 19 analysts in Dow Jones' survey estimated a smaller corn crop than USDA's July estimate of 13.875 billion bushels (bb). Survey estimates ranged from 12.72 bb on the low end to 13.55 bb on the high end, settling for an average crop estimate of 13.164 bb, based on a yield of 165.3 bushels per acre.

If true, that would suggest new-crop U.S. ending corn stocks of roughly 1.9 bb, but the analysts surveyed are estimating 1.603 bb of U.S. ending corn stocks in 2019-20. Perhaps they anticipate a lower corn yield from the September WASDE report as the demand side of the corn market is not looking bullish at the moment.

It remains remarkable at this point in early August that we can't confidently say whether the 2019 corn crop is closer to 13.0 bb or 14.0 bb, but that's exactly the situation we find ourselves in. The traditional narrowing of crop estimates that typically comes with USDA's June 30 Acreage report should finally arrive in Monday's report and carries potential for a big price response.

Because planting conditions in 2019 were unlike any other year, I cannot over-emphasize the level of uncertainty going into Monday's report. For that reason, I offer the following guidelines as to what we might expect from post-report corn prices.

First, the bearish possibility. If for some odd reason, USDA's corn planting estimate stays high and the corn crop estimate is near 14 bb, look for heavy noncommercial selling to follow. As of July 30, CFTC data shows noncommercials holding 241,659 contracts net long in corn, a large enough position to cause problems for prices in the event of a bearish report.

The bullish possibility, as I see it, will need 85 ma or less of corn plantings to bring the crop estimate under 13.0 bb. A crop below 13.0 bb should tighten corn supplies enough to cause some discomfort to those needing corn in the year ahead and keep new-crop corn prices supported above $4.00.

Anything in the middle ground, between 13.0 bb and 14.0 bb, will likely result in a roughly neutral price response by the market. However, there is still a risk of noncommercial selling if the numbers are not clearly bullish.

SOYBEANS

In the July WASDE report, USDA pegged the 2019 soybean crop at 3.845 bb, based on 80.0 ma planted and a yield of 48.5 bushels per acre (bpa). USDA's estimate of U.S. ending soybean stocks dropped to 795 million bushels (mb) for 2019-20.

In Monday's report, there is a chance of a modest increase in USDA's estimate of soybean acres, especially if corn acres are adjusted lower, as many of us suspect they will be. As with corn, the soybean yield may see a small downward adjustment as the good-to-excellent crop ratings for both remain the lowest in seven years. The more accurate soybean yield estimate will be seen in September.

I miss the days when good weather was the most bearish threat soybean prices faced, but here in August we can't talk about soybeans without mentioning how bearish trade relations with China have become. The latest turn of events has China stopping ag imports from the U.S. after President Donald Trump announced a new 10% tariff on $300 billion of Chinese goods, starting Sept. 1. China is also said to be considering new tariffs on U.S. goods.

Given the latest events, it is difficult to say if USDA will reduce its estimates of U.S. soybean demand on Monday, but the possibility certainly exists. Looking at Dow Jones' survey, analysts don't seem overly concerned and are anticipating only small changes to USDA's July estimates. For Aug. 12, analysts expect USDA to estimate a 3.783 bb soybean crop, based on a lower yield of 47.5 bpa. New-crop ending soybean stocks are expected to increase only slightly, from 795 mb to 818 mb for 2019-20.

Analysts also expect USDA to increase its estimate of world soybean stocks from 104.5 million metric tons (mmt) to 106.2 mmt (3.90 bb). A recent USDA attache report suggests USDA's estimates of China's soybean imports will be reduced for both the old-crop and new-crop seasons. However, final WASDE decisions don't always agree with recommendations from attache reports.

WHEAT

Wheat is the one crop that is not likely to see many surprises in Monday's new USDA estimates, but a big price response is still possible, depending on what happens to corn. Aside from corn, Dow Jones' survey expects USDA's estimate of U.S. ending wheat stocks to drop slightly, from 1.000 bb in July to 991 mb on Monday.

The U.S. wheat crop is expected to total 1.926 bb -- slightly higher than USDA's 1.921 bb estimate in July, with only minor tweaks to the various wheat categories. The anticipated drop in ending stocks is likely related to U.S. wheat shipments being up 25% early in 2019-20 from a year ago.

Analysts expect USDA to slightly reduce its estimate of world ending wheat stocks from July's 286.5 mmt to 284.7 mmt (10.46 bb) on Monday. Anything over the 281.06 mmt (10.33 bb) of ending stocks from 2017-18 will qualify as a new record and will keep bearish pressure on wheat prices.

It is also important to know where the wheat stocks are being held; to that point, USDA's July estimate said the top eight wheat exporters will have 2.23 bb of ending wheat stocks on hand at the end of 2019-20. That's roughly the same as the previous year and near the lowest surplus in six years.

This year continues to be unique for crops, but Monday's WASDE report should help shed some light on a mystery that has gone on too long. Join us Monday at noon CDT for a recap of USDA's latest estimates and what they mean for grain prices. I will also highlight any surprises and answer your questions.

**

Join us Monday at noon CDT for DTN's post-report webinar where I will discuss USDA's estimates, discuss any surprises and answer your questions. Sign up for Monday's webinar at:

https://dtn.webex.com/…

U.S. PRODUCTION (Million Bushels) 2019-20
Aug Avg High Low Jul 2018-19
Corn 13,164 13,550 12,719 13,875 14,420
Soybeans 3,783 3,960 3,633 3,845 4,554
All Wheat 1926 1,990 1,873 1,921 1,884
Winter 1295 1,330 1,270 1,291 1,184
HRW 811 834 799 805 662
SRW 256 259 250 259 286
White 228 250 222 257 272
Durum 58 70 53 58 77
Other 570 585 542 572 623
U.S. AVERAGE YIELD (Bushels Per Acre) 2019-20 (WASDE)
Aug Avg High Low Jul 2018-19
Corn 165.3 167.4 162.0 166.0 176.4
Soybeans 47.5 48.5 46.0 48.5 51.6
U.S. ENDING STOCKS (Million Bushels) 2018-2019
Aug Avg High Low Jul
Corn 2,392 2,490 2,220 2,340
Soybeans 1,069 1,200 988 1,050
U.S. ENDING STOCKS (Million Bushels) 2019-20
Aug Average High Low Jul
Corn 1,603 1,900 1,297 2,010
Soybeans 818 1,096 607 795
Wheat 991 1,053 865 1,000
WORLD ENDING STOCKS (Million metric tons) 2018-2019
Aug Avg High Low Jul
Corn 329.5 332.0 326.0 328.8
Soybeans 113.4 115.5 111.4 113.0
Wheat 275.0 276.0 273.0 275.1
WORLD ENDING STOCKS (million metric tons) 2019-20
Aug Avg. High Low Jul
Corn 290.9 298.7 282.0 298.9
Soybeans 106.2 124.1 101.0 104.5
Wheat 284.7 290.0 282.0 286.5

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

(BE/ )


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, August 19, 2019 11:39AM CDT
Friday, August 16, 2019 9:01AM CDT
Monday, August 12, 2019 12:26PM CDT
Technically Speaking
Editorial Staff
Monday, August 19, 2019 8:43AM CDT
Monday, August 12, 2019 8:51AM CDT
Monday, August 5, 2019 8:34AM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Thursday, August 15, 2019 9:59AM CDT
Tuesday, August 6, 2019 1:25PM CDT
Wednesday, July 31, 2019 12:57PM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Wednesday, August 14, 2019 5:06PM CDT
Tuesday, August 13, 2019 11:41AM CDT
Friday, August 9, 2019 4:27PM CDT
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Friday, August 9, 2019 12:57PM CDT
Thursday, July 25, 2019 1:43PM CDT
Wednesday, July 3, 2019 2:19PM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Friday, August 16, 2019 2:37PM CDT
Thursday, August 15, 2019 10:42AM CDT
Thursday, August 15, 2019 10:42AM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Friday, August 16, 2019 3:27PM CDT
Friday, August 16, 2019 3:27PM CDT
Tuesday, July 30, 2019 1:41PM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Thursday, August 1, 2019 11:33AM CDT
Monday, July 29, 2019 5:10PM CDT
Tuesday, July 9, 2019 2:22PM CDT
South America Calling
Editorial Staff
Wednesday, August 7, 2019 8:34AM CDT
Tuesday, July 16, 2019 8:46AM CDT
Tuesday, April 23, 2019 2:43PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Thursday, August 8, 2019 5:45PM CDT
Thursday, August 1, 2019 11:12AM CDT
Friday, July 19, 2019 12:53PM CDT
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Tuesday, August 6, 2019 11:10AM CDT
Wednesday, July 31, 2019 2:04PM CDT
Thursday, July 25, 2019 3:26PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Thursday, August 15, 2019 4:16PM CDT
Thursday, August 15, 2019 4:16PM CDT
Wednesday, August 14, 2019 6:01PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Tuesday, August 6, 2019 12:29PM CDT
Friday, July 19, 2019 5:43PM CDT
Wednesday, May 1, 2019 5:59PM CDT
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN