USDA Estimates Whopping Stocks-to-Use Ratio for Corn

USDA released its first detailed forecast of the 2020-21 crop projections with a 15.99 billion-bushel (bb) corn crop that would lead to 3.318 bb ending stocks at the end of the marketing year and a stocks-to-use ratio at a whopping 22.4% for the crop.

USDA on Tuesday released the May World Agricultural Supply and Demand Estimates (WASDE) report as well as the Crop Production report.

The WASDE this month also includes updated supply and demand estimates for the 2019-20 crop (old crop) and the first detailed forecast for the 2020-21 crop (new crop) as well.

According to DTN Lead Analyst Todd Hultman, Tuesday’s new U.S. ending stocks estimates were bearish for corn and wheat, bullish for soybeans. Meanwhile, the world ending stocks estimates were bearish for corn and wheat, neutral for soybeans.

USDA re-surveyed producers in Michigan, Minnesota, South Dakota and Wisconsin in April to get a more accurate reading of acres left unharvested over the winter. December production surveys found that there were significant unharvested corn acres in many northern Midwest and Plains states, as well as many unharvested soybean acres in Michigan, North Dakota and Wisconsin. Based on this information, USDA made some adjustments to Dec. 1 on-farm stocks for the 2019-20 crop. Because significant acres remain unharvested in North Dakota in April, USDA will re-contact producers there in May to gather production data on those acres. Changes from that survey will be published in the June Crop Production Report.

You can also access the full reports here:

For DTN’s exclusive audio comments on today’s reports, visit: http://listen.aghost.net/…

— Crop Production: https://www.nass.usda.gov

— World Agricultural Supply and Demand Estimates (WASDE): http://www.usda.gov/…

CORN

In the 2020-21 crop, USDA maintained planted acres at 97 million acres and a yield estimate at 178.5 bushels an acre (bpa), for crop production at 15.995 bb.

For usage with the new crop, USDA maintains usage in most major categories will be higher than the 2019-20 crop. USDA pegged feed and residual use at 6.05 bb, and pegged ethanol demand for the year at 5.2 bb. Exports were projected at 2.15 bb.

Total demand for the new crop would be pegged at 14.8 bb, but the carry in from the old crop of 2.098 bb leads to ending stocks at 3.318 bb. That puts the stocks-to-use ratio at 22.4%.

The average farm-gate price for the new crop is projected at $3.20 a bushel.

For the old crop, USDA again lowered ethanol usage another 100 million bushels (mb) to 4.95 bb, but USDA also raised exports 50 mb to 1.775 bb. USDA also bumped up feed usage by 25 mb to 5.7 bb as well.

Ending stocks for the old crop came in at 2.098 bb, up 6 mb from the April report. That moved the stocks-to-use ratio up just slightly to 15.16%.

The average farm-gate price for the 2019-20 crop held steady at $3.60 a bushel.

Globally, corn production for the 2019-20 crop year for Brazil and Argentina remained the same as April. Brazil was pegged at 101 million metric tons (mmt) and 50 mmt for Argentina.

For the 2020-21 global corn crop, USDA projected beginning stocks for the World less China at 106.66 mmt and production at 926.86 metric tons. Exports were projected at 182.23 mmt and ending stocks for the 2020-21 crop was projected at 139.57 mmt.

SOYBEANS

USDA forecast 2020-21 (new-crop) production at 4.125 bb based on the March 30 Prospective Plantings acreage estimate of 83.5 million acres and a trendline yield of 49.8 bpa. New-crop ending stocks, at 405 mb, came in below analysts’ pre-report estimate of 452 mb.

On the new-crop demand side, USDA sees exports recovering to 2.05 billion bushels, a 375 mb increase from the 2019-20 crop year. It’s crush estimate increased 5 mb.

“With higher global soybean import demand for 2020-21 led by expected gains for China, U.S. export share is expected to rise to 34% from the 2019-20 record low of 30%,” the report stated.

For the 2019-20 (old-crop) season, USDA put ending stocks at 580 mb, which is up 100 mb from the April estimate due to a 100 mb cut to exports.

The national average farm gate price for new-crop soybeans was $8.20, which was below the old-crop estimate of $8.50.

Globally, USDA estimated 2019-20 (old-crop) ending stocks at 100.27 mmt, a slight revision from last month’s 100.45 mmt. While USDA lowered Brazilian production .5 mmt to 124 mmt, it’s still expecting the country to produce a record crop. Argentina production, at 51 mmt, was 1 mmt lower than last month.

For the 2020-21 crop season, USDA estimated ending stocks at 98.39 mmt. USDA sees Brazilian production continuing to increase, with its initial forecast for the 2020-21 season, which is still a long ways away, coming in at 131 mmt.

WHEAT

USDA pegged total wheat production for 2020 at 1.866 bb, down from 1.920 bb in 2019, with lower projected yields offsetting higher harvested acreage. The all-wheat yield was pegged at 49.5 bpa, down 2.2 bushels from last year.

Of that, 1.25 bb is expected to be winter wheat, down 4% from 2019. The average winter wheat yield was estimated at 51.7 bpa, down 1.9 bpa from last year’s average yield.

Hard red winter production was pegged at 733 mb, down 12% from last year. Soft red winter production came in at 298 mb, up 24% from 2019. White Winter was pegged at 224 mb, down 3% from last year.

USDA expects 2020-21 (new-crop) U.S. wheat ending stocks to come in at 909 mb, well above its 777 mb estimate at USDA’s Ag Outlook Conference in February and on the high end of pre-report analyst estimates.

For 2019-20 (old-crop) U.S. wheat-ending stocks, USDA’s estimate came in at 978 mb, up from 970 mb in April’s report.

The average farmgate price for new-crop wheat was $4.60 per bushel, the same as USDA’s estimated farmgate price for old-crop wheat.

Globally, ending stocks for new-crop wheat were pegged at 310.12 mmt. Old-crop wheat ending stocks were estimated at 295.12 mmt.

LIVESTOCK

Beef and pork supplies were adjusted lower in the May WASDE report with total projected beef supplies at 29,376 million pounds, while pork supplies totaled 28,913 million pounds. This is an adjustment lower of 1,717 million pounds of beef and 1,597 million pounds of pork compared to April levels. This accounts for 94.47% of beef and 94.76% of pork supplies compared to April estimates.

Beef supplies are at 94.9% of 2019 levels, while pork supplies projections are estimated at 99.17% of 2019 levels. These adjustments focus on the industry challenges in meat procurement during the COVID-19 crisis and will likely continue to adjust short-term supply levels.

Animal price levels for the second and third quarter were also adjusted lower in the cattle market with steer prices falling $6 to $10 per cwt from Aprils report release, while barrow and gilt price estimates increased $1 to $3 per cwt per cwt from the April report.

Given the concern of continued strong animal production, while processing schedules remain under pressure, these moves are not out of line with overall market expectations.

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Editor’s Note: Join DTN Analyst Todd Hultman at 12 p.m. CDT on Tuesday, May 12, for a look at what the day’s numbers mean for grain prices. To register, visit: https://dtn.webex.com/…

Source: DTN