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USDA significantly lowers soybean ending stocks

TAGS: Corn Soybeans
soybean-harvest-185130160.jpg Don Farrall/Getty Images Plus
The monthly WASDE Report was released Oct. 9, which will likely impact corn and soybean markets in the coming months.

The USDA World Supply and Demand Estimates Report projects much lower overall U.S. soybean ending stock levels by the end of the 2020-21 marketing year, compared to the 2019-20 carryover levels. The overall supply of corn and soybeans for 2020-21 is at higher levels than existed a year ago; however, the projected supply levels have been lowered from their peak numbers in mid-Summer this year.

The report also showed an increase in total demand levels for both corn and soybeans in the coming year, compared to 2019-20 levels. Total demand for corn usage in 2020-21 was increased by nearly 700 million bushels from 2019-20 year-end estimates, due to an expected increase in the amount of corn used for ethanol production, as well as a significant increase in the projected corn export levels. Total expected soybean usage for 2020-21 was increased by 563 million bushels from the 2019-20 final usage estimates, mainly due to a large projected large increase in export levels to China and other countries.

USDA is now estimating 2020-2021 U.S. corn ending stocks at 2.17 billion bushels, which compares to previous year-end carryout levels of 1.99 billion bushels in 2019-20, 2.22 billion bushels in 2018-19, and 2.14 billion bushels in 2017-18. Interestingly, USDA has reduced the 2020-21 corn carryout level significantly from projections of over 3 billion bushels earlier this summer, which has helped improve 2020 corn marketing opportunities. The U.S. corn carryout-to-use ratio is estimated at 14.8 percent for 2020-21, which compares to 14.4 percent in 2019-20, 15.5 percent for 2018-19, and 14.5 percent in 2017-18. This means there could be some potential for short-term rallies in the cash corn market in the coming months, especially if USDA makes further downward adjustments in the expected 2020 corn production or the projected 2020-21 ending stocks.

The 2020-21 U.S. soybean ending stocks in the WASDE Report were estimated at 290 million bushels, which is a decline of nearly 57 percent from the 2019-20 ending stocks of 523 million bushels and is down significantly from the 2018-19 ending stocks of 909 million bushels. The projected soybean ending stocks for the coming year are also below the carryout level of 438 million bushels for 2017-18 and are similar to the ending stock level of 302 million bushels in 2016-17. The soybean carryout-to-use ratio for 2020-21 is estimated at 6.4 percent, which is well below the 13.2 percent ratio for 2019-20 and is considerably below the nearly 23 percent ratio for 2018-19. The increased soybean exports and the expected decrease in soybean ending stocks has offered some opportunities in recent weeks for producers to price their 2020 soybean production.

Price estimates

USDA is estimating the U.S farm-level cash corn price for 2020-2021 at an average of $3.60 per bushel, which was an increase of $.10 per bushel from the September estimate. The 2020-21 USDA price estimates are the expected average farm-level prices for the 2020 crop from September 1, 2020 to August 31, 2021; however, they do not represent estimated prices for either the 2020 or 2021 calendar year. The projected USDA average corn price of $3.60 per bushel for 2020-2021 compares to final market-year average corn prices of $3.56 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel for both 2017-18 and 2016-17.

USDA is projecting the U.S. average farm-level soybean price for the 2020-2021 marketing year at $9.80 per bushel, which is an increase of $.55 per bushel from the September estimate and is $1.60 per bushel higher than a few months ago. The 2020-21 soybean price estimate of $9.80 per bushel would be the highest in five years, and would compare to final market-year average prices of $8.57 per bushel for 2019-20, $8.48 per bushel in 2018-19, $9.35 per bushel in 2017-18, and $9.47 per bushel in 2016-17.

Corn, soybean yield estimates

The monthly USDA Crop Production Report was also released Oct. 9. USDA decreased the expected 2020 national average corn yield by only one-tenth of a bushel and kept to projected 2020 soybean yield the same, as compared to the September report. The latest estimated 2020 national corn yield is 10.9 bushels per acre higher than the final 2019 average yield, while the projected U.S. average soybean yield for 2020 is 4.5 bushels per acre above the final 2019 national soybean yield.

The latest USDA report estimated the total U.S. corn production for 2020 at 14.72 billion bushels, which is 8.1 percent above the production level of 13.62 billion bushels in 2019, and compares to production levels of 14.42 billion bushels in 2018, 14.6 billion bushels in 2017, and the 2016 record production of 15.15 billion bushels. USDA is estimating the 2020 national average corn yield at the record level of 178.4 bushels per acre, which is well above the 2019 average yield of at 167.5 bushels per acre that was the lowest national average yield in recent years. The estimated 2020 U.S. corn yield also compares to 176.4 bushels per acre in 2018, the previous record yield of 176.6 bushels per acre in 2017, and 174.6 bushels per acre in 2016. The projected 2020 U.S. harvested corn acreage is 82.5 million acres, which is above the 81.3 million acres that were harvested last year.

The report estimated 2020 U.S. soybean production at 4.27 billion bushels, which is 20 percent above the 2019 production level of 3.55 billion bushels; however, this is still below the production level of 4.4 billion bushels in both 2018 and 2017. USDA is estimating 2020 U.S. soybean yield at 51.9 bushels per acre, which compares to 47.4 bushels per acre in 2019, 50.6 bushels per acre in 2018, and the record U.S. soybean yield of 52.0 bushels per acre in 2016. The harvested soybean acreage for 2020 is estimated at 82.3 million acres, which is up from 74.9 million acres in 2019, but below the 87.6 million harvested acres in 2018. 

Based on the October report, Minnesota is projected to have a record corn yield of 202 bushels per acre in 2020, which was increased by 2 bushels from the September estimate and is the highest of any of the major corn producing States. The 2020 Minnesota estimate is 29 bushels per acre above the 2019 corn yield of 173 bushels per acre, and compares to previous state yields of 182 bushels per acre in 2018, the current state record corn yield of 194 bushels per acre in 2017, and 193 bushels per acre in 2016. USDA is estimating the 2020 Iowa corn yield at 186 bushels per acre, which has been lowered by 16 bushels per acre since the mid-August derecho storm and late-season drought conditions. The 2020 yield in Iowa compares to 198 bushels per acre in 2019, 196 bushels per acre in 2018, 202 bushels per acre in 2017 and the record yield of 203 bushels per acre in 2016.

Other estimates for 2020 average corn yields are Illinois at 200 bushels per acre, compared to 181 bushels per acre in 2019, Indiana at 189 bushels per acre, compared to 169 bushels per acre in 2019, Nebraska at 187 bushels per acre, compared to 182 bushels per acre in 2019, South Dakota at 165 bushels per acre, compared to 144 bushels per acre in 2019, North Dakota at 160 bushels per acre, compared to 131 bushels per acre in 2018, and Wisconsin at 186 bushels per acre, compared to 166 bushels per acre in 2019.

USDA is estimating the 2020 Minnesota soybean yield at 52 bushels per acre, which is just below the record yield of 52.5 bushels per acre in 2016 and compares to 44 bushels per acre in 2019 and 49 bushels per acre in 2018. The 2020 Iowa soybean yield is estimated at 56 bushels per acre, compared to 55 bushels per acre in 2019, 56 bushels per acre in 2018 and the 2016 record yield of 60 bushels per acre. Other projected state soybean yields for 2020 are Illinois at 60 bushels per acre, compared to 54 bushels per acre in 2019, Indiana at 60 bushels per acre, compared to 51 bushels per acre in 2019, and Nebraska at 60 bushels per acre, compared to 58.5 bushels per acre in 2019. The South Dakota 2020 soybean yield is estimated at 48 bushels per acre, compared to 42.5 bushels per acre in 2019, North Dakota at 34 bushels per acre, compared to 31.5 bushels per acre in 2019, and Wisconsin at 55 bushels per acre, compared to 47 bushels per acre in 2019.   

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