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2019 crop yield estimates increased

In a move that surprised most grain marketing experts, USDA increased the estimated final 2019 U.S. average yields for both corn and soybeans in the January Crop Production report.

USDA increased the estimated final 2019 national average corn yield by 1 bushel per acre and increased the total 2019 U.S corn production by 30 million bushels, compared to estimates in November 2019. USDA also increased the estimated 2019 national average soybean yield by 1/2 bushel per acre in the January 10 report, but kept the expected total 2019 soybean production level very near the level in the November report.  

Corn

The latest USDA report estimated the total U.S. corn production for 2019 at 13.69 billion bushels, which is approximately 20 percent below the 2018 production level of 14.42 billion bushels in 2018 and is well below the 2016 record U.S. corn production of 15.15 billion bushels. USDA is now estimating the 2019 national average corn yield at 168 bushels per acre, which compares to a yield estimate of 167 bushels per acre in the November report. The estimated 2019 U.S. corn yield compares to 176.4 bushels per acre in 2018, the record yield of 176.6 bushels per acre in 2017, and 174.6 bushels per acre in 2016. The projected 2019 U.S. harvested corn acreage is 81.4 million acres, which is down slightly from 81.7 million acres in 2018.

Soybeans

The latest USDA report estimated 2019 U.S. soybean production at 3.56 billion bushels, which is down significantly from over 4.4 billion bushels in both 2018 and 2017, as well as 4.3 billion bushels in 2016. USDA is now estimating a U.S. soybean yield for 2019 at 47.4 bushels per acre, compared to 46.9 bushels per acre in the November report. The 2019 yield is below 50.6 bushels per acre in 2018, 49.3 bushels per acre in 2017, and the record U.S. soybean yield of 52.0 bushels per acre in 2016. The 2019 harvested soybean acreage is projected at 75 million acres, which is down 14 percent from 87.6 million acres in 2018. 

Local yield projection

Based on the January 10 report, Minnesota is expected to have a final 2019 corn yield of 174 bushels per acre, which was increased by 4 bushels from the November estimate, but is 8 bushels per acre below the 2018 yield of 182 bushels per acre. The 2019 state estimate also compares to the record state corn yield of 194 bushels per acre in 2017, 193 bushels per acre in 2016, and 188 bushels per acre in 2015. USDA is estimating the 2019 Iowa corn yield at 198 bushels per acre, which is an increase of 6 bushels from the November estimate, and compares to 196 bushels per acre in 2018, 202 bushels per acre in 2017 and the state record yield of 203 bushels per acre in 2016. Iowa, Missouri, and Kansas were the only Midwestern states projected to have a higher estimated corn yield for 2019 than the 2018 yield.

Other estimates for 2019 average corn yields are Illinois at 181 bushels per acre, compared to 210 bushels per acre in 2018, Indiana at 169 bushels per acre, compared to 189 bushels per acre in 2018, Nebraska at 182 bushels per acre, compared to 192 bushels per acre in 2018, South Dakota at 145 bushels per acre, compared to 160 bushels per acre in 2018, North Dakota at 141 bushels per acre, compared to 153 bushels per acre in 2018.

USDA is estimating the 2019 Minnesota soybean yield at 44 bushels per acre, compared to 49 bushels per acre in 2018, 47.5 bushels per acre in 2017, and the record state yield of 52 bushels per acre in 2016. The 2019 Iowa soybean yield is estimated at 55 bushels per acre, compared to 56 bushels per acre in 2018, 57 bushels per acre in 2017 and the 2016 record yield of 60 bushels per acre. Other projected state soybean yields for 2019 are Illinois at 54 bushels per acre, compared to 63.5 bushels per acre in 2018, Indiana at 51 bushels per acre, compared to 57.5 bushels per acre in 2018, Nebraska at 58.5 bushels per acre, compared to 58 bushels per acre in 2018, South Dakota at 42.5 bushels per acre, compared to 45 bushels per acre in 2018, and in North Dakota at 32 bushels per acre, compared to 35 bushels per acre in 2018.   

Supply and demand

The monthly USDA World Supply and Demand Estimates (WASDE) Report was also released on January 10, which is likely to impact corn and soybean markets in the coming months. The WASDE Report showed a lower overall 2019-20 U.S. corn supply estimates than existed in 2018-19, as well as a slight decrease in total corn demand levels for the coming year. This resulted in a reduction in the projected corn carryout levels by the end of the 2019-20 marketing year. Total demand for corn usage in 2019-20 was lowered by 158 million bushels from 2018-19 levels, primarily due to an expected reduction in the corn export levels for the coming year, which was somewhat offset by a likely increase in corn used for feed in the coming year. Corn used for ethanol production in the current year is projected to remain very similar to a year earlier.

USDA is now estimating 2019-2020 U.S. corn ending stocks at 1.89 billion bushels, which is down slightly from the December WASDE report. This compares to carryout levels of 2.11 billion bushels in 2018-19, 2.14 billion bushels in 2017-18 and 2.29 billion bushels in 2016-17. The U.S. corn carryout to use ratio would be at approximately 13.4 percent for 2019-20, which compares to 14.6 percent for 2018-19, 14.5 percent in 2017-18 and 15.7 percent in 2016-17. This means there could be some potential for short-term rallies in the cash corn market in the coming months, especially in areas of the U.S. such as portions of the Upper Midwest that had below average corn yields in 2019.

The 2019-20 U.S. soybean ending stocks in the WASDE Report were estimated at 475 million bushels, which is at the same level as the December WASDE report, but is down significantly from the 2018-19 ending stocks of 913 million bushels. The projected 2019-20 soybean ending stocks are quite similar to the carryout level of 438 million bushels that existed in 2017-18; however, they are still considerably higher than the ending stock levels of 302 million bushels in 2016-17 and 197 million bushels for 2015-16.

The soybean carryout-to-use ratio for 2019-20 is estimated at 11.5 percent, which is down considerably from 23 percent for 2018-19. Soybean demand for 2019-20 is projected to increase slightly compared to a year earlier, due to expected small increases in both the soybean crush and export levels. The expected large decrease in soybean ending stocks may offer some opportunities for improved soybean prices in the coming months, especially if there are increased soybean sales to China resulting from some potential resolution to the ongoing trade situation between the U.S. and China.

Price estimates

USDA is currently estimating the U.S average on-farm cash corn price for 2019-2020 at an average of $3.85 per bushel, which is unchanged from the December estimate and would be at the highest level since the 2013-14 marketing year. The 2019-20 USDA price estimates are the expected average farm-level prices for the 2019 crop from Sept. 1, 2019 to Aug. 31, 2020; however, they do not represent estimated prices for either the 2019 or 2020 calendar year. The projected USDA average corn price of $3.85 per bushel for 2019-2020 compares to national average corn prices of $3.61 per bushel for 2018-19, $3.36 per bushel for both 2017-18 and 2016-17, and $3.61 per bushel for 2015-16.

USDA is projecting the U.S. average farm-level soybean price for the 2019-2020 marketing year at $9 per bushel, which is an increase of $.15 per bushel from the December estimate. The 2019-20 soybean price estimate of $9 per bushel compares to $8.48 per bushel for 2018-19, $9.35 per bushel for 2017-18, and $9.47 per bushel in 2016-17.

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