USDA Reports Preview
Time for US Row-Crop Estimates
Typically, USDA's January World Agricultural Supply and Demand Estimates (WASDE) report doesn't have much competition for attention just 10 days into the new year, but things are different for Friday's report. The U.S. and China are expected to sign a phase-one trade agreement in the following week and a recent U.S. military strike has ratcheted up tensions with Iran -- two events that traders will also be watching closely as USDA releases new estimates.
USDA will release its monthly Crop Production, Crop Production Annual Summary, Grain Stocks, Winter Wheat Seedings and WASDE reports at 11 a.m. CST Friday, Jan. 10.
CORN
Ever since USDA estimated 91.7 million acres (ma) of planted corn on June 28, there has been a significant wedge between USDA's view of the U.S. corn crop and the view of many farmers who have experienced this year's weather problems firsthand.
On Jan. 10, USDA will factor in its latest findings after adverse fall weather made harvest especially difficult for Northern states where moisture levels were high and crops struggled to reach maturity. Dow Jones' gathering of analyst estimates expects USDA to lower its assessment of the corn crop from 13.661 billion bushels (bb) to 13.494 bb. The small adjustment is based on a slightly lower yield of 165.9 bushels per acre (bpa) and a slightly smaller harvested area of 81.3 ma.
Dow Jones' survey also expects U.S. ending corn stocks to drop from 1.910 bb to 1.753 bb in 2019-20, leaving no room for a probable cut in USDA's estimate of corn exports. With U.S. corn export commitments running 42% lower in 2019-20 than a year ago, a lower export estimate from USDA is likely to peg ending stocks higher than Dow Jones' survey on Friday.
When it comes to world corn supplies, Dow Jones' survey expects a small reduction in USDA's estimate of ending stocks, from 300.56 million metric tons (mmt) to 297.3 mmt or 11.70 bb.
Even though the 2019 corn crop was not fully harvested in early December, one of the factors helping USDA with its crop estimate will be the U.S. inventory of Dec. 1 corn stocks. According to Dow Jones, surveyed analysts are expecting USDA to find 11.416 bb of corn on hand, down from 11.937 bb a year ago.
If Dow Jones' estimates are close, Friday's corn prices are not likely to show much movement, but there is a chance for a more volatile surprise.
SOYBEANS
For U.S. soybeans, USDA's December crop estimate of 3.550 bb is not as controversial, and analysts are expecting USDA to lower the January estimate to 3.519 bb, based on a slightly lower yield of 46.6 bpa and no change in the estimate of 75.6 million harvested acres.
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Fall conditions weren't any better for soybeans than they were for corn, but soybeans had the advantage of being harvested sooner with 96% of soybeans harvested by Dec. 1, according to USDA's Crop Progress report.
Dow Jones' average estimate of 432 million bushels (mb) of U.S. ending soybean stocks is down from 475 mb in December and suggests a small increase in the demand estimate for soybeans.
With U.S. soybean export commitments down 5% in 2019-20, there is no immediate push to change USDA's export estimate, and it is not likely USDA will factor in anticipated purchases from a phase-one agreement with China before it is signed.
Dow Jones' survey expects USDA to lower its estimate of world soybean stocks in 2019-20 from 96.4 mmt to 95.7 mmt or 3.52 bb. In December, USDA estimated Brazil will have just 1.85 mmt or 68 mb of soybeans on hand Jan. 31, 2020, the end of its local marketing year.
For the grain stocks report, Dow Jones estimates 3.179 bb of U.S. soybeans will be found on hand Dec. 1, down from 3.746 bb a year ago.
USDA's soybean estimates don't have as much potential for surprise on Friday as the corn estimates do, but next week's trade agreement with China holds significant bullish potential for soybean prices, depending on what the agreed details might turn out to be.
WHEAT
The U.S. wheat crop estimate is not an issue for Friday's WASDE report, and Dow Jones' survey expects only a slight reduction from December's U.S. ending wheat stocks estimate of 974 mb. USDA, however, will have its first official estimate of winter wheat planting for the next U.S. crop in 2020.
According to Dow Jones, analysts expect 30.7 ma of U.S. winter wheat were planted in the fall, down from 31.2 ma a year ago. If true, that will be the smallest U.S. winter wheat planting since 1909 after fall prices for KC wheat futures were near their lowest level in 13 years.
The estimate breaks down as 22.1 ma for hard red winter wheat, 5.1 ma for soft red winter wheat and 3.4 ma for soft white winter wheat -- all three categories down slightly from last year.
If analysts surveyed by Dow Jones are correct, USDA will peg Dec. 1 wheat stocks at 1.922 bb, down from 2.385 bb a year ago. USDA's actual number will help us understand how U.S. wheat demand has done in the first half of 2019-20 and could offer some hope for slightly lower ending stocks.
Even so, USDA's new wheat estimates are not apt to have much price impact Friday, but there is always a chance wheat prices could respond to changes in corn.
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Join us for a post-report webinar Friday, at noon CST, as I talk about USDA's latest estimates and what they mean for corn, soybean and wheat prices. We are also glad to answer any questions about USDA's report you may have. Register now at: https://dtn.webex.com/…
| U.S. PRODUCTION (Million Bushels) 2019-20 | ||||||
| Jan | Avg | High | Low | Dec | 2018-19 | |
| Corn | 13,494 | 13,701 | 13,030 | 13,661 | 14,420 | |
| Soybeans | 3,519 | 3,591 | 3,457 | 3,550 | 4,428 | |
| WINTER WHEAT ACREAGE (million acres) 2020-21 | ||||||
| Jan | Avg. | High | Low | 2019-20 | ||
| All Winter | 30.7 | 32.2 | 30.0 | 31.2 | ||
| Hard Red | 22.1 | 23.1 | 21.6 | 22.5 | ||
| Soft Red | 5.1 | 5.6 | 4.6 | 5.2 | ||
| White | 3.4 | 3.5 | 3.3 | 3.5 | ||
| QUARTERLY STOCKS (million bushels) | ||||||
| 12/1/19 | Avg | High | Low | 9/1/19 | 12/1/18 | |
| Corn | 11,416 | 11,660 | 10,926 | 2,114 | 11,937 | |
| Soybeans | 3,179 | 3,379 | 3,023 | 913 | 3,746 | |
| Wheat | 1,922 | 2,047 | 1,835 | 2,385 | 2,009 | |
| U.S. ENDING STOCKS (Million Bushels) 2019-20 | ||||||
| Jan | Avg | High | Low | Dec | 2018-19 | |
| Corn | 1,753 | 1,960 | 1,479 | 1,910 | 2,114 | |
| Soybeans | 432 | 520 | 310 | 475 | 913 | |
| Wheat | 972 | 1,000 | 930 | 974 | 1,080 | |
| WORLD ENDING STOCKS (million metric tons) 2019-20 | ||||||
| Jan | Avg | High | Low | Dec | ||
| Corn | 297.3 | 301.0 | 290.5 | 300.6 | ||
| Soybeans | 95.7 | 97.5 | 91.7 | 96.4 | ||
| Wheat | 288.2 | 290.0 | 284.0 | 289.5 | ||
Todd Hultman can be reached at todd.hultman@dtn.com
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