8-19-19-Coats_BT_Edits.jpg Brent Murphree
The current marketing period will continue to be a highly challenging business environment.

Supplies and demand challenge clear picture for crop prices

Prices for rice, grain, soybeans and cotton are being driven by large supplies and demand uncertainty.

USDA’s U.S. and global rice, corn, soybean, and cotton balance sheets continue to show formidable supplies and uncertain demand. Considerations for both bullish and bearish markets exist, and the attached slide show gives a good picture of the existing situation.

Visualization through the accompanying supply and demand slide show is all important to this article. Key slides have been replicated and moved to the front of the slide show for a condensed summary, Charts A1-A17, so please take the time to download and review by clicking the link at the bottom of this article.   

The following is a list of bullish price considerations: first, U.S. production unknowns still remain elevated for rice, soybeans, and corn, due to lateness of planting caused by excessive rain and flooding during the planting season; second, concerns U.S. and global weather patterns will slowly erode U.S. and global production as the 2019/20 global production period progresses; third, hope remains ongoing trade talks will yield a return to more normal trade relations with China and other trading partners. 

On the other hand there are also bearish price considerations: first, the late planting season experienced by rice, soybean, and corn producers will culminate in an extended growing season characterized by most producers having favorable weather through the harvest period; second, changing U.S. and global weather patterns during the 2019/20 marketing period have limited impact on global production, due to advances in production efficiencies and productivity; and third, trade negotiations especially with China will see limited progress and require ongoing negotiations into the future. 

U.S. and World Rice  

  • World Rice Ending Stocks: 2019/20 world rice ending stocks are estimated at 175 million metric tons, the highest on record, 2 percent higher than 2018/19, Chart A1.
  • U.S. Long Grain Rice Ending Stocks: 2019/20 long grain rice ending stocks are estimated at 29.2 million cwt, 13-percent below 2018/19. 2019 September WASDE Report expectations are for potentially, lower acres and reduced ending stocks, so market participants patiently wait, Chart A2.
  • USDA Long Grain Rice Price: 2018/19 and 2019/2020 average farm prices are $10.80 per cwt and $11.00 per cwt, respectively.
  • USDA Medium Grain California Rice Price: 2018/19 and 2019/2020 average farm prices are $18.00 per cwt and $18.00 per cwt, respectively.
  • USDA Medium Grain Southern Rice Price: 2018/19 and 2019/2020 average farm prices are $12.20 per cwt and $11.50 per cwt, respectively.

U.S. and World Soybeans

  • World Soybean Total Supply: 2019/20 world soybean total supply is estimated at 605 million metric tons, the second highest on record, Chart D8.
  • World Soybean Ending Stocks: 2019/20 world soybean ending stocks are estimated at 101.7 million metric tons the second highest on record, Chart D9.
  • U.S. Soybean Total Supply: 2019/20 world soybean total supply estimated at 129.8 million metric tons, the second highest on record, Chart D11.
  • U.S. Soybean Ending Stocks: 2019/20 United States ending stocks are estimated at 20.5 million metric tons the second highest on record, Chart D12.

U.S. and Global Corn

  • World Corn Total Supply: 2019/20 world corn total supply is estimated at 1.602 billion metric tons, the second largest on record.
  • World Corn Ending Stocks: 2019/20 world corn ending stocks are estimated at 308 million metric tons, down from the previous four marketing periods but still the fifth highest on record, Chart A6.
  • U.S. Corn Total Supply: 2019/20 U.S. corn total supply is estimated at 414 million metric tons, the fourth largest on record.  
  • U.S. Corn Ending Stocks. 2019/20 U. S. corn ending stocks are estimated at 55.4 million metric tons the third highest since 1987, Chart A7.

U.S. and Global Cotton

  • World Cotton Total Supply: 2019/20 world cotton total supply is estimated at 249.8 million bales, the third highest on record, Chart F5.
  • World Cotton Ending Stocks: 2019/20 world cotton ending stocks are estimated at 82.4 million bales, above the previous three marketing periods, Chart F6.
  • U.S. Cotton Total Supply: 2019/20 U.S. cotton total supply is estimated at 27.8 million bales, the third highest on record and the highest in the current 12 marketing periods, Chart F8.
  • U.S. Cotton Ending Stocks: 2019/20 United States cotton ending stocks are estimated at 7.2 million bales, the highest in the current 10 marketing periods, Chart A9.

U.S. and Global Wheat

  • World Wheat Total Supply: 2019/20 world wheat total supply is estimated at 1.223 billion metric tons, the highest on record, Chart G5.
  • World Wheat Ending Stocks: 2019/20 world wheat ending stocks are estimated at 285.4 million metric tons, the highest on record, Chart G6.
  • U.S. Wheat Total Supply: 2019/20 U.S. wheat total supply is estimated at 86.7 million metric tons, Chart G8.
  • U.S. Wheat Ending Stocks: 2019/20 U.S. ending stocks declined from a high in 2016/17’s 32.1 million tons to 2019/20’s 27.6, but remains the fourth highest since 1987/88, Chart G9. 

Accompanying Fundamental Chart Book Index

  • A1-A16. Global and U.S. Ending Stocks: Rice, Soybean, Corn, Cotton and Wheat Charts (metric tons)
  • B1-B14. Eleven World Rice and Three United States Charts (metric tons)
  • C1-C19. U.S. Long and Medium Grain Rice Charts (million cwt.)
  • D1-D12. Select World and U.S. Soybean Charts (metric tons)
  • E1-E9. Select World and U.S. Corn Charts (metric tons)
  • F1-F9. Select World and U.S. Cotton Charts (metric tons)
  • G1-G9. Select World and U.S. Wheat Charts (metric tons)

Quite simply, the 2019/20 marketing period will continue to be a highly challenging business environment, so one’s production, financial and marketing advisors will be most critical to one’s 2019 business success.

 

No Crystal Ball

Since no one has a crystal ball or knows the future always consult an investment professional or professionals before making investment decisions. The world’s greatest speculators, investors and money managers are challenged by today’s global business environment.   

Robert Coats, Ph.D.

  • Economist, Arkansas Department of Agriculture, 1 Natural Resources Drive, Little Rock, Arkansas robert.coats@agriculture.arkansas.gov
  • Retired professor and extension economist after 37-years with the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service

Download Slide Show for charts and expanded details, Click Download Link

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES-ONLY

TAGS: Crops
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