USDA Long-Term Projections
USDA Projects More Corn, Fewer Soybean Acres in 2019
MOUNT JULIET, Tenn. (DTN) -- USDA's long-term projections through 2028 show corn acreage gaining ground in 2019, jumping to 92 million acres, and hovering near that level over the next decade.
Soybean acreage is expected to fall to 82.5 million acres in 2019 and 2020 before slowly gaining acreage through the end of the projection period.
Wheat acreage could see a bump to 51 million acres in 2019 and is projected to hover in a range between 48 million and 50 million acres in the succeeding years.
On Friday, USDA released tables prepared for its Agricultural Projections to 2028 report, which will be released in full in February. Short-term projections from the October World Agricultural Supply and Demand report were used as a starting point. A full explanation of USDA's rationale will be included in the February report.
"The projections do not represent USDA forecasts, but rather reflect a conditional long-run scenario based upon specific assumptions about macroeconomic conditions, policy, weather, and international developments, with no domestic or external shocks to global agricultural markets," the agency said in a news release. "The Agricultural Act of 2014 is assumed to remain in effect through the projection period."
USDA's projections for 2019 are generally in line with what market watchers have been expecting. A variety of early acreage forecasts call for an increase in corn acres, with most ranging between 92 million and 93 million acres, amid abundant U.S. soybean supplies due to a record-large crop and the ongoing trade dispute with China.
"When one considers all the market and weather uncertainties involved, we're already on thin ice projecting numbers for 2019-20," DTN Analyst Todd Hultman said. "Forecasts for years beyond the first one are especially meaningless."
Hultman also noted that USDA's global GDP projections are on the low end comparted to estimates from the International Monetary Fund, "So there is room for better demand than shown in Friday's tables."
The IMF forecasts 3.7% growth this year and next, while USDA factors in 3.1% for 2018 and 2.9% for 2019.
In addition to acreage, USDA released projected supply and demand balance sheets for each crop.
On corn, USDA sees ending stocks for 2019-20 dipping to 1.603 billion bushels from 1.813 bb this year. The average farm price is projected to increase 40 cents to $3.90 per bushel. Those estimates are based on a 14.93 bb crop with a yield of 176.5 bushels per acre. It assumes 15.19 bb of total use, including a 50-million-bushel uptick in corn use for ethanol; 60 mb increase in food, seed and industrial; and 50 mb decline in exports.
"As early estimates go, this is a reasonable starting point, but keep in mind that good weather has the ability to increase that production estimate," Hultman said. "It is also interesting that USDA estimates 92.0 million acres of planted corn in early 2019, a 3% increase from 2018."
USDA estimates domestic soybean ending stocks will decline from 885 mb in 2018-19 to 723 mb in 2019-20. A majority of the decline is expected to stem from declining acreage, with plantings dropping 6.6 million acres to 82.5 million.
"So the 4.09 bb of estimated production, based on a yield of 50.0 bpa is already suspiciously low," Hultman said. "Total use is estimated at 4.277 bb, but of course, that remains a difficult item to estimate in 2018-19, let alone the following season, given the trade dispute with China. USDA's new estimate for 2019-20 expects an average farm price of $8.75 a bushel, but there is more than the usual amount of uncertainty here."
On wheat, USDA calls for 51 million acres in 2019-2020 season, up from the 47.8 million expected this season. That's forecast to yield a 2.06 bb crop, offset by 2.213 bb of total use. Ending stocks are forecast to fall slightly, from 956 mb in 2018-19 to 933 mb in 2019-20, earning an average farm price of $5.20 a bushel.
"With current wheat exports far below pace in 2018-19, this new estimate may also be on the rosy side, but keep in mind, all of Friday's estimates should be written in light pencil with extra erasers handy," Hultman said. "There is a lot we do not yet know about the next two years, let alone the next 10."
Katie Dehlinger can be reached at Katie.firstname.lastname@example.org
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