An Early USDA Crop Forecast

OMAHA (DTN) -- USDA's Office of Chief Economist on Tuesday offered an early look at USDA's Agricultural Projections to 2027 for crops and livestock that will officially be released at the USDA Ag Outlook conference in February.

USDA's early estimates project both corn and soybean planted acres next spring to hit 91 million acres while wheat acreage will fall to 45 ma. Still, USDA projects slightly lower corn and soybean production in the 2018-19 marketing year.

USDA's 10-year projections operate under an all-things-being-equal understanding. As USDA notes, "The projections are based on certain assumptions about global economic conditions, policy, weather and international developments, with no domestic or external shocks to global agricultural markets."

The 10-year forecasts are based on a composite of model results and analysis, starting with numbers from the Nov. 9 World Agricultural Supply and Demand Estimates report. The more complete report in February will provide more detail on projections for global commodity trade and farm income.

CORN

USDA's early estimate is for 91 ma of corn to be planted next spring, and keeping with the trend line, USDA projects yield at 173.5 bushels per acre, down 1.9 bpa from USDA's yield estimate for the current crop. That would put 2018-19 corn production at 14.52 billion bushels, or 58 million bushels lower than the 14.78 billion projected for the 2017-18 crop.

With 2018-19 carrying in 2.487 bb, total domestic and export use for the 2018-19 marketing year is pegged at 14.45 bb, leading to a 2.607 bb carryover, or a stocks-to-use ratio of 18%.

Corn prices for 2018-19 are pegged at an average $3.30 a bushel, which is 10 cents higher than the average price projected for the 2017-18 corn crop.

The 10-year baseline average for corn projects planted acreage slowly declining through 2027-28 to 87.5 ma, about a 3.2% drop from the 90.4 ma of corn planted in 2017. But USDA forecasts steady corn yield increases, topping an average of 191.5 bpa for the 2027-28 crop. That will drive up production to consistently produce more than 15 bb annually in the latter half of the 10-year outlook.

The stocks-to-use percentage for corn isn't forecast to dip below 17% over the next decade.

SOYBEANS

Soybean acreage is projected early on at 91 ma for the 2018-19 marketing year with yield pegged initially at 48.4 bpa. That would translate into a 4.36 bb crop, down about 65 mb from the 2017-18 projected crop of 4.425 bb.

Despite a slightly smaller crop, USDA lowers the initial average farm-gate price to $9.30 bu, down 17 cents from what farmers are projected to receive for the 2017-18 crop.

Soybean planted acreage is projected in the 10-year outlook to hit 92 ma before leveling off at 91.5 ma. Yields will continue to grow incrementally as well, though USDA does not see yields consistently hitting 52 bpa until the latter three years of the 10-year forecast. Production over that time is projected to steadily rise and hit 4.81 bb by the 2027-28 crop season.

Domestic and export demand for soybeans will each grow steadily over the decade with domestic crush hitting 2.165 bb, or 11.4% higher than the 2017-18 domestic crush estimate of 1.94 bb.

Soybean exports are expected to reach 2.52 bb at the end of the 10-year forecast, or about 11.7% higher than the 2.25 bb of soybeans projected for export from the 2017-18 crop.

The stocks-to-use ratio, pegged at 9.8% for the 2017-18 crop, will come down as low as 6.8% during the latter years of the forecast.

WHEAT

USDA projects wheat planted acreage will fall again for 2018-19 to 45 ma, down 1 ma from 2017-18. Wheat acreage over the 10-year forecast will climb back to 48 ma before leveling off.

Wheat yield for 2018-19 is projected at 47.4 bpa, up 1.1 bpa from the 2017-18 yield of 46.3 bpa.

Wheat production in 2018-19 would hit 1.815 bb. USDA projects both yield increases and higher acreage to increase wheat production over the next decade. Over the latter part of the decade, wheat production would average over 2 bb a year.

Higher domestic use and exports over the next decade will slowly trim down the average ending stocks from the 2017-18 projected 935 mb. Ending stocks for wheat are projected to slip under 714 mb after 2020-21 and remain under 700 mb annually.

The average wheat price, pegged at $4.60 for the 2017-18 crop, is expected to remain at that price for the 2018-19 crop year as well. USDA projects wheat prices will slowly tick up over the next few years to average $5.10 bu over the latter half of the decade.

LIVESTOCK

Pork production over the next decade is expected to grow 11.6% while exports are expected to grow just under 20% over the decade. Per capita consumption of pork is expected to rise, but the forecast for hog prices is expected to show some decline over the three years before rising over the latter part of the decade. Still, the forecast doesn't show hog prices from 2018-2027 as strong as the 2017 average of $52.31 per hundredweight (cwt).

For cattle, USDA projects average five-area steer prices in 2018 at $117.25 cwt and feeder steers in Oklahoma City at $144 cwt. Farm calves are projected to average $167.29 in 2018 as well. Still, USDA projects declining cattle prices from current market levels over the next decade for both farm calves and feeders. That's partly due to USDA projecting bumps in total cattle inventory over the next two years to 94.5 million head before showing some decline in the total cattle herd after that.

To view the full forecast spreadsheets, go to https://www.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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