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Farm Futures reports:

USDA slashed 2020 yield forecasts for corn and soybeans more than any trade estimates had anticipated in the lead up to the November 2020 WASDE report release. Corn and soybean futures surged up 2.35% - 2.82% higher in the moments following the reports' release. The smaller U.S. crops are part of a larger global trend of reduced crop output in 2020 as ending stock estimates for corn, soybeans, and wheat shrunk across the world.

USDA's latest outlook for corn notes "lower production, reduced feed and residual use, larger exports, and smaller ending stocks." Production estimates fell 215 million bushels to 14.507 billion bushels. Analysts were expecting a smaller reduction, with an average trade guess of 14.659 billion bushels. Per-acre yields were slashed from 178.4 bushels per acre in October down to 175.8 bpa.

Export projections are bullish, with USDA projecting they will rise 325 million bushels this marketing year to 2.650 billion bushels - a record, if realized. Meantime, feed and residual use estimates dropped 75 million bushels. Ultimately, the agency sees 2020/21 ending stocks dropping 465 million bushels to 1.7 billion, reaching the lowest levels since 2013/14.

Factoring in all of this data, USDA raised the average corn price by 40 cents, to $4.00 per bushel.

Global stocks are also trending lower, moving from 11.829 billion bushels in October down to 11.474 billion. USDA says reductions in the European Union, Russia, Ukraine and Moldova are more than offsetting increases in South Africa and Laos. The agency notes Ukraine's decline in particular, which is expecting the lowest output in nearly a decade.

For soybeans, USDA's production forecast fell 98 million bushels lower to 4.17 billion bushels. Analysts were expecting to see that number land at 4.251 billion bushels. Per-acre yield estimates dropped by more than 1 bpa from October, falling to 50.7 bpa.

Ending stocks also fell more than expected, dropping to just 190 million bushels after the agency trimmed another 100 million bushels from its October estimates. If realized, that will send domestic stocks to the lowest levels in seven years.

Globally, USDA projects lower production and crush totals compared to October. That leaves world ending stocks for 2020/21 moderately lower, moving from 3.259 billion bushels down to 3.179 billion bushels. Reduced production estimates in Argentina and India are largely driving this trend.

It may be no surprise, then, that USDA upped its average 2020/21 price by another 60 cents, now at $10.40 per bushel.

Wheat export estimates were unchanged, but an increase in domestic use pushed projected 2020/21 ending stocks down another 6 million bushels to 877 million. Analysts were expecting a smaller reduction, with an average trade guess of 881 million bushels. USDA elected to hold the season-average farm price steady, at $4.70 per bushel.

Globally, USDA notes an uptick in consumption and trade. Recent increases in imports are being driven by China, Pakistan and Turkey. China could import the most wheat since 1995/96 at its current pace. World ending stocks moved modestly lower, trending from 11.810 billion bushels in October down to 11.773 billion bushels.

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