Posted on 02/08/2019 11:48 AM

Market reaction

Ahead of USDA's report, corn futures were trading 1 to 2 cents higher, soybeans were narrowly mixed, wheat futures were mostly 2 to 6 cents higher and cotton futures were mixed, with old-crop contracts mildly lower and new-crop contracts slightly higher.

In reaction to the report, corn futures are still trading 1 to 2 cents lower, soybeans are also down a penny or two, SRW wheat futures are mixed, HRW futures are 1 to 3 cents lower, spring wheat futures are mostly 1 to 3 cents lower and cotton futures remain narrowly mixed, with most contracts favoring the downside.

 

Annual Production Summary

Corn: 14.420 billion bu.; trade expected 14.532 billion bu.
-- compares to 14.626 billion bu. in November; 14.604 billion bu. in 2017
Beans: 4.544 billion bu.; trade expected 4.569 billion bu.
— compares to 4.600 billion bu. in November; 4.392 billion bu. in 2017
Cotton: 18.390 million bales; trade expected 18.43 million bales 
— compares to 18.588 million bales in December; 20.923 million bales in 2017

USDA cut its corn crop estimate 206 million bu. from November on a 2.5-bu. cut to the national average corn yield (176.4 bu. per acre) and a 27,000-acre cut to harvested corn acres. At 14.420 billion bu., the corn crop is also 112 million bu. below the average pre-report trade estimate.

Looking at the state-by-state corn yield estimates, increases from November occurred in North Dakota (up 7 bu., to 153 bu. per acre). Yields were unchanged from November in Illinois (210 bu. per acre). Yield cuts from November were estimated in Indiana (down 5 bu. to 189 bu.), Iowa (down 2 bu., to 196 bu.), Kansas (down 1 bu. to 129 bu.), Michigan (down 13 bu. to 153 bu.), Minnesota (down 2 bu. to 182 bu.), Missouri (down 5 bu. to 140 bu.), Ohio (down 3 bu. to 187 bu.), South Dakota (down 5 bu. to 160 bu.) and Wisconsin (down 5 bu. to 172 bu. per acre).

The bean crop estimate is 56 million bu. below the November estimate. USDA cut a half bushel from the national average bean yield (now at 51.6 bu. per acre) and made a 233,000-acre cut to harvested bean acres. At 4.544 billion bu., the bean crop estimate is also 25 million bu. below the average trade estimate.

Looking at the state-by-state soybean yield estimates, increases from November were noted in Arkansas (up 1 bu. to 51 bu. per acre), Illinois (up 1 bu. to 65 bu.), Kansas (up 1.5 bu. to 43.5 bu.) and Minnesota (up 0.5 bu. to 50.5 bushels per acre). Yields were steady in Michigan (48 bu.) and Wisconsin (49 bu. per acre). Yields were down from November in Indiana (down 1.5 to 58.5 bu.), Iowa (down 1 bu. to 57 bu.), Missouri (down 1 bu. to 45 bu.), Nebraska (down 2 bu. to 59 bu.), North Dakota (down 0.5 to 39.5 bu.), Ohio (down 1 to 58 bu.) and South Dakota (down 3 bu. to 46 bu. per acre).

The cotton crop estimate came in 140,000 bales below the average pre-report trade estimate. USDA puts the national average cotton yield at 838 lbs. per acre, down 22 lbs. per acre from December. That was partially offset by a 69,000-acre increase in harvested cotton acres. At 18.390 million bales, the cotton crop is down 198,000 bales.

 

Quarterly Grain Stocks

Corn: 11.952 billion bu.; trade expected 12.092 billion bu.
— compares to 2.140 billion bu. Sept. 1; 12.567 billion bu. Dec. 1, 2017
Beans: 3.736 billion bu.; trade expected 3.743 billion bu.
— compares to 438 million bu. Sept. 1; 3.161 billion bu. Dec. 1, 2017
Wheat: 1.999 billion bu.; trade expected 1.957 billion bu.
— compares to 2.379 billion bu. Sept. 1; 1.873 billion bu. Dec. 1, 2017

December 1 corn stocks in all positions came in 140 million bu. below the average pre-report trade estimate. On-farm corn stocks totaled 7.45 billion, down 4% from year-ago with off-farm stocks of 4.5 billion bu., down 7% from last year. Implied disappearance in the first quarter of the 2018-19 marketing year was 4.61 billion bu., up 6.2% from the same quarter in the previous year.

December 1 soybean stocks in all positions came in 7 million bu. below the average pre-report trade estimate. On-farm soybean stocks totaled 1.94 billion bu., up 30% from year-ago, with off-farm stocks of 1.8 billion bu. up 7% from last year. Indicated disappearance for September through November is 1.25 billion bu., down 20% from the same period a year earlier.

December 1 wheat stocks in all positions came in 42 million bu. above the average pre-report trade estimate. On-farm wheat stocks totaled 504 million bu. on Dec. 1, up 28% from year-ago, with off-farm stocks of 1.5 billion bu. up 1% from last year. Implied disappearance in the second quarter of the 2018-19 marketing year was 390 million bu., down 1% from year-ago.

 

Winter Wheat Seedings

All winter wheat: 31.290 mil. acres; trade expected 32.128 mil. acres
-- compares to 32.535 mil. acres in 2018
HRW: 22.2 mil. acres; trade expected 22.579 mil. acres
-- compares to 22.923 mil. acres in 2018
SRW: 5.66 mil. acres; trade expected 5.963 mil. acres
-- compares to 6.076 mil. acres in 2018
White winter: 3.44 mil. acres; trade expected 3.488 mil. acres
-- compares to 3.536 mil. acres in 2018

All winter wheat acres are came in 838,000 below pre-report trade expectations. Much of the shortfall is in HRW country where acres are down 3% from year-ago. SRW acres fell 7% from last year and white wheat acres are down 3% from 2018.

 

U.S. carryover

Corn: 1.735 billion bu. for 2018-19; down from 1.781 billion bu. in December
Beans: 910 million bu. for 2018-19; down from 955 million bu. in December
Wheat: 1.010 billion bu. for 2018-19; up from 974 million bu. in December
Cotton: 4.3 million bales for 2018-19; down from 4.4 million bales in December

On the smaller corn crop estimate, total supplies of corn for the 2018-19 marketing year are down 211 million bu. from December. Total use is down 165 million bu., with estimated feed and residual down 125 million bu. (to 5.375 billion bu.) and food, seed & industrial use down 40 million bushels (including a 25-million-bu. cut to estimated corn-for-ethanol use of 5.575 billion bu.). Estimated corn exports were unchanged from December at 2.450 billion bushels. Carryover is down 46 million bu. from December, but it is still 27 million bu. above the average pre-report trade guess. USDA now puts the national average on-farm cash corn price at $3.35 to $3.85, down a dime on the top and up a dime on the bottom of the range from December.

Total soybean supplies for the 201819 marketing year are down 61 million bu. from December. On the demand side, USDA increased estimated crush by 10 million bu. (to 2.09 billion bu.), but cut estimated exports 25 million bu. to 1.875 billion bushels. Residual use was also cut 1 million bu. to drop bean ending stocks by 45 million bu. from December. USDA puts the national average on-farm cash soybean price at $8.10 to $9.10, up a quarter on the bottom and down a quarter on the top of the range from December.

USDA made no change to the supply side of the wheat balance sheet from December. On the usage side, USDA cut 6 million bu. from estimated seed use and cut 30 million bu. from estimated feed and residual use. That pushed carryover up 36 million bu. from December. USDA puts the national average on-farm cash wheat price at $5.05 to $5.25, unchanged from December.

Total supplies of cotton for the 2018-19 marketing year is down 180,000 bales from December. USDA cut total use 100,000 bales, with domestic use estimated down 100,000 bales from December (at 3.2 million bales). Unaccounted use was also increased 10,000 bales. USDA now puts the national average on-farm cash cotton price at 71 cents to 73 cents, steady on the bottom of the range but down 4 cents on the top of the range from December.

 

Global carryover

Corn: 309.78 MMT for 2018-19; up from 308.80 MMT in December
Beans: 106.72 MMT for 2018-19; down from 115.33 MMT in December
Wheat: 267.53 MMT for 2018-19; down from 268.10 MMT in December
Cotton: 75.5 million bales in 2018-19; up 73.19 million bales in December

 

Global production highlights

Argentina beans: 55.0 MMT for 2018-19; compares to 55.5 MMT in December
Brazil beans: 117.0 MMT in 2018-19; compares to 122.0 MMT in December
Argentina wheat: 19.2 MMT in 2018-19; compares to 19.5 MMT in December
Australia wheat: 17.0 MMT in 2018-19; compares to 17.0 MMT in December
China wheat: 131.43 MMT in 2018-19; compares to 132.5 MMT in December
Canada wheat: 31.8 MMT in 2018-19; compares to 31.8 MMT in December
EU wheat: 137.6 MMT for 2018-19; compares to 137.6 MMT in December
Russia wheat: 71.6 MMT for 2018-19; compares to 70.0 MMT in December
Ukraine wheat: 25.0 MMT for 2018-19; compares to 25.0 MMT in December
China corn: 257.33 MMT for 2018-19; compares to 256.0 MMT in December
Argentina corn: 46.0 MMT for 2018-19; compares to 42.5 MMT in December
South Africa corn: 11.5 MMT for 2018-19; compares to 12.0 MMT in December
Brazil corn: 94.5 MMT for 2018-19; compares to 94.5 MMT in December
China cotton: 27.5 million bales for 2018-19; compares to 27.0 million bales in December

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