USDA Reports Preview
A Gaggle of Guesses
As I look at the range of guesses ahead of USDA's May set of guesses, the most interesting aspect is how large the difference is between most highs and lows. Understandably, it's those ranges associated with USDA's 2018 production and 2018-19 ending stocks that are the widest.
How could it be otherwise, though? We don't know -- and won't know when Thursday is over -- how many acres will be planted. We don't know -- and won't know when Thursday comes to an end -- what growing season weather will be. We don't know -- and won't know when Thursday has come and gone -- what national average yield comes in at. And we don't know -- and won't know as the sun sets Thursday -- what old-crop ending stocks actually are, meaning new-crop beginning stocks will still be a mystery.
Other than that, this set of guesses is golden.
USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CDT Thursday.
The most interesting group of guesses, to me, is old-crop ending stocks. Will USDA change its demand guess based on exports of corn, soybeans, wheat, etc. since the last set of guesses were released in April? If so, it would stand to reason projected demand for corn would be increased, possibly leading USDA to match the slightly lower pre-report estimate of 2.178 billion bushels (bb). However, analysis of the current pace of U.S. exports shows us that corn shipments have a chance of catching up with USDA's April demand guess of 2.225 bb. Will USDA up its guess again, making more work for the market to do? Time will tell.
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As for old-crop soybean ending stocks, I'm undecided on my expectations. Seasonally, this is when USDA begins to accelerate its decrease, acknowledging in numbers without acknowledging in words that it systematically underestimated demand or overestimated supply. The previous four marketing years have seen an average decrease of 20 million bushels (mb) in USDA's old-crop ending stocks guess, with the average pre-report estimate coming in only 9 mb below USDA's April guess of 550 mb. On the other hand, export demand for U.S. soybean supplies has seen its seasonal decline over the last month, leaving marketing-year total shipments on pace to come up 260 mb short of USDA's April guess of 2.065 bb. However, there is also crush demand to consider, with USDA possibly upping its guess again following its 10 mb increase in April.
The reality of USDA's May set of guesses is that most folks want to see what new-crop production numbers it pulls out of the hat. Let's break this down: First, USDA will likely stick with its prospective plantings number of 88 million acres (ma) of corn and 89 ma of soybeans. Keep in mind, though, that both of those are likely to climb above 90 ma, eventually. USDA will also likely stick with its trend-line national average yield numbers of 174 bushels per acre (bpa) for corn and 48.5 bpa for soybeans.
From there, the math for making guesses is relatively straightforward. The previous five years have seen corn harvested acres come in at 92% of planted area, so if USDA holds to its 88 ma planted, then harvest acres would be 80.8 ma. Take that times USDA's trend-line yield of 174 bpa and the guess on production would be 14.059 bb, just shy of the average pre-report guess of 14.091 bb. Doing similar math for soybeans (89 X 99% X 48.5) results in a new-crop production guess of 4.273 bb. The average pre-report guess came in at 4.311 bb.
Interestingly enough, though most watchers here in the U.S. will be frothing over domestic new-crop production guesses, it's actually South American old-crop guesses that are more important. Will USDA continue to trim its Argentine production numbers for corn and soybeans, strengthening the argument for increased domestic demand guesses. Will USDA increase its Brazilian soybean production guess and decrease that country's soybean production guess? If so, does that make demand for U.S. corn that much more attractive?
Before we conclude our discussion of guesses, let's look at the most questionable of them all: domestic and world ending stocks. I've already mentioned some of the unknown variables that will determine domestic new-crop ending stocks, and for global, we can throw in not knowing what old-crop production actually turns out to be. Yet the gaggle of geese came up with a pre-report guess for domestic soybean ending stocks of 549 mb (not far from the current marketing year's guess) with a range (Remember, I mentioned this earlier?) from 715 mb to 336 mb. Corn's average guess came in at 1.631 bb, with a range from 1.907 bb to 1.467 bb.
To summarize: The gaggle of geese have no clue what new-crop ending stocks will be because there are so many variables regarding new-crop production and new-crop beginning stocks because old-crop ending stocks have yet to be determined by old-crop demand.
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Editor's Note: Join DTN Analyst Todd Hultman at 12 p.m. CDT on Thursday, April 10, as he looks at USDA's "initial" estimates for the 2018-2019 crops as well as changes to old-crop supply and demand tables. To register, visit https://dtn.webex.com/…
| 2017-18 U.S. ENDING STOCKS (Million Bushels) | ||||||
| May | Average | High | Low | April | 2016-17 | |
| Corn | 2,178 | 2,208 | 2,132 | 2,182 | 2,293 | |
| Soybeans | 541 | 565 | 490 | 550 | 302 | |
| Grain Sorghum | 30 | 32 | 28 | 29 | 33 | |
| Wheat | 1,067 | 1,090 | 941 | 1,064 | 1,181 | |
| 2018-19 U.S. ENDING STOCKS (Million Bushels) | ||||||
| May | Average | High | Low | Outlook | ||
| Corn | 1,631 | 1,907 | 1,467 | 2,272 | ||
| Soybeans | 549 | 715 | 336 | 460 | ||
| Wheat | 923 | 1,005 | 780 | 931 | ||
| 2018-19 U.S. PRODUCTION (Million Bushels) | ||||||
| May | Average | High | Low | Outlook | 2017 | |
| Corn | 14,091 | 14,604 | 13,921 | 14,390 | 14,604 | |
| Soybeans | 4,311 | 4,430 | 4,248 | 4,320 | 4,392 | |
| 2018-19 WINTER WHEAT PRODUCTION (Billion Bushels) | ||||||
| May | Average | High | Low | Outlook | 2017-18 | |
| All Wheat | 1,757 | 1,832 | 1,612 | 1,839 | 1,741 | |
| All Winter Wheat | 1,180 | 1,304 | 1,062 | NA | 1,269 | |
| HRW | 644 | 797 | 540 | NA | 750 | |
| SRW | 306 | 330 | 218 | NA | 292 | |
| White | 230 | 260 | 201 | NA | 227 | |
| 2017-18 WORLD ENDING STOCKS (million metric tons) | ||||||
| May | Avg. | High | Low | April | 2016-17 | |
| Corn | 195.20 | 198.00 | 192.20 | 197.78 | 230.90 | |
| Soybeans | 90.00 | 91.00 | 88.50 | 90.80 | 96.72 | |
| Wheat | 271.30 | 273.40 | 268.50 | 271.22 | 254.60 | |
| 2018-19 WORLD ENDING STOCKS (million metric tons) | ||||||
| May | Avg. | High | Low | |||
| Corn | 182.00 | 192.50 | 148.70 | |||
| Soybeans | 91.10 | 97.00 | 75.50 | |||
| Wheat | 267.70 | 278.70 | 260.00 | |||
| WORLD PRODUCTION (Million Metric Tons) 2017-2018 | ||||||
| May | Avg. | High | Low | April | 2016-17 | |
| Corn | ||||||
| Brazil corn | 88.2 | 91.0 | 83.9 | 92.0 | 98.5 | |
| Argentina corn | 32.1 | 33.0 | 31.0 | 33.0 | 41.0 | |
| Soybeans | ||||||
| Brazil soybeans | 116.6 | 119.0 | 115.0 | 115.0 | 114.1 | |
| Argentina soybeans | 38.6 | 40.0 | 37.0 | 40.0 | 57.8 | |
| 2017-18 | 2016-17 | |||||
| Wheat | May | Apr | May | Apr | ||
| European Union | 151.60 | 145.25 | ||||
| FSU - 12 | 142.77 | 130.47 | ||||
Darin Newsom can be reached at darin.newsom@dtn.com
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