FAO Projection for 2019 U.S. Corn Crop at 12.99 billion bu (330 mmt) + World Wheat S-D

Here is an article from the Foreign Agricultural Service regard their projections for the size of the 2019 U.S. corn crop.  They project a crop of 330 mmt or 12.99 billion bushels.

http://www.fao.org/worldfoodsituation/csdb/en/?utm_source=Ag+Insider+Subscribers&utm_campaign=a412282389-EMAIL_CAMPAIGN_2019_06_06_08_45_COPY_01&utm_medium=email&utm_term=0_b0e8c666dd-a412282389-120343085

Diminishing maize production prospects in the United States dampen the global cereal production outlook this year

Release date: 06/06/2019

FAO’s latest forecast for world cereal production in 2019 points to an increase of 1.2 percent from 2018, to 2 685 million tonnes.

However, the year-on-year expansion is now much less significant than earlier predicted, as global maize production is now seen to fall in 2019, largely because of sharp downward revisions since the previous report concerning maize production prospects in the United States.

Due to prolonged excessive wet conditions resulting in major delays in crop plantings, this year’s maize production in the United States is now pegged at 330 million tonnes, down 45 million tonnes from FAO’s first production forecast published in May and almost 10 percent (36 million tonnes) short of last year’s level.

The recent USDA crop progress report pointed to a sharply reduced planted area of only 58 percent of planting intentions as of 26 May, well below the 5-year average level of 90 percent and the slowest pace ever recorded.  (Note: this has been updated to 67% planted as of June 2, 2019 – down from the recent 5 year average of 96%.  Daniel O’Brien, Extension Agricultural Economist, Kansas State University)

Most of the expected rebound in global cereal production in 2019 is attributed to expected expansions in wheat and barley production, with year-on-year increases of 5.3 percent and 5.8 percent, respectively. Total rice production is likely to remain close to last year’s record level as expectations of area-driven expansions in Asia could offset foreseen contractions in most other regions, triggered by inclement weather and prospects of reduced profit margins.

World cereal utilization in 2019/20 is forecast to reach 2 707 million tonnes, down 15.5 million tonnes, or 0.6 percent, from the May forecast but still 1 percent (26 million tonnes) higher than in 2018/19. Most of this month’s downward adjustment again concerns the United States, where, because of deteriorating production prospects, total domestic utilization of maize is seen to fall below the 2018/19 level. Following the revision for the United States, world utilization of coarse grains in 2019/20 is now anticipated to reach 1 434 million tonnes, down 0.9 percent from the previous forecast but 0.7 percent higher than in 2018/19. Global wheat utilization is expected to grow by 1.2 percent, reaching 755 million tonnes, while that of rice is predicted to reach 518 million tonnes, 1.4 percent higher than in 2018/19.

Based on the latest production and utilization forecasts, world cereal stocks could decline by as much as 26 million tonnes, or 3 percent, in the new season to a four-year low of 830 million tonnes. This figure is around 18 million tonnes, or 2 percent, below the FAO’s May forecast. The sharp month-on-month downward revision is mostly associated with maize, whereas the forecasts for wheat and rice inventories have been raised slightly since the previous report. The projected fall in cereal stocks would result in a drop in the global cereal stock-to-use ratio to just below 30 percent, which still points to a relatively comfortable supply level.

Globally, coarse grain inventories are seen heading towards a second consecutive annual decline in 2019/20, falling by 9 percent to just over 369 million tonnes, the lowest level since 2014/15. By contrast, total wheat stocks could expand by 4.6 percent year-on-year and approach a near-record level of 281 million tonnes. The increase of 1 percent in wheat stocks since May reflects upward adjustments made for the EU and the United States, outweighing downward revisions in Australia and the Russian Federation.  World rice stocks at the close of 2019/20 are still envisaged to fall slightly (0.9 percent) from their record opening levels, to 179 million tonnes, despite some upward revisions to forecasts for the United States and Viet Nam.

World trade in cereals in 2019/20 is forecast at around 414 million tonnes, up 1.2 million tonnes, or 0.3 percent, from the previous forecast and nearly 6 million tonnes, or 1.4 percent, higher than the estimated total shipments of cereals in 2018/19. Most of the predicted expansion in world cereal trade is associated with greater wheat and rice trade, while trade in coarse grains, most notably maize, is expected to fall below the 2018/19 level, mainly on expectations of reduced imports by the EU and a sharp reduction in exports by the United States. By contrast, wheat trade is predicted to rebound by 3.3 percent from the 2018/19 reduced level, driven by stronger import demand by several countries, especially in Africa and Asia, and supported by the expectation of large export availabilities in the Black Sea region and the EU. World rice trade, on the other hand, is likely to contract by 3.5 percent in 2019 before a possible rebound in 2020 on expectation of greater purchases by several countries in Africa.

KSU Corn Market Outlook in Late-May 2019: ‘Tight Supply-Demand & Higher Corn Prices in “New Crop” MY 2019/20’

An analysis of Corn Market Outlook in Late-2019 for “new crop” 2019/20 marketing years is provided in the following article from Kansas State University Department of Agricultural Economics.  This information follows the USDA World Agricultural Supply and Demand Estimates (WASDE) and other USDA reports on May 10, 2019, with info from the USDA NASS Crop Progress reports on May 26, 2019

A full version of this article is available on the KSU AgManager website http://www.agmanager.info/ at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

Following is a summary of the article on “Corn Market Outlook in Late-May 2019″

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U.S. Corn Market Outlook in Late-May 2019

‘Tight Supply-Demand & Higher Corn Prices in “New Crop” MY 2019/20’

Daniel O’Brien – Extension Agricultural Economist, K-State Research and Extension

May 29, 2019

 

1) The U.S. Corn Market Situation in Spring 2019

The serious and prolonged spring planting season problems during April-May 2019 for U.S. corn producers are leading to a sharp reduction in 2019 U.S. corn production prospects.  The likelihood of a U.S. corn production shortfall in year 2019 is bring about a classic “short crop” marketing year for U.S. corn markets in “new crop” MY 2019/20. The last major “short crop” for U.S. corn production occurred seven (7) years ago in year 2012 due to excessive summer heat.    

Concerns about delayed plantings or even the potential inability to plant corn or other crops this year have driven corn futures sharply higher in recent weeks.   “Old crop” JULY 2019 Corn futures prices have increased from a low of $3.43 /bushel on May 13th to a high of $4.38 on May 29th before closing at $4.18 ¾ that same day.  Similarly, “new crop” DEC 2019 Corn futures prices have increased from a low of $3.63 ¾ /bushel on May 13th to a high of $4.54 on May 29th before closing at $4.35 ¾ that same day (Figures 1a-b-c, & 2a-b).   With this rally in corn futures, managed money (specs) who had been holding record short or bearish positions have begun to buy back their short futures positions and instead build up the long or buy side of trade portfolios (Figures 3a-b-c-d).

The U.S. government is also planning to provide a second round of Market Facilitation Payments (MFPs) to U.S. crop producers, with the stipulation that crops have to be actually planted in year 2019 to collect these MFP funds.  The longer into June 2019 these U.S. corn planting delays go, the more difficult it may be for U.S. corn producers to keep with their original plans to plant corn this year, and not switch to other shorter season cropping options such as soybeans and grain sorghum.   

It is an oversimplification to say that the direction of the U.S. corn market for the remainder of “current” MY 2018/19 (ending August 31st) and the start of “new crop” MY 2019/20 (starting September 1st) will depend largely on the amount of U.S. corn acres planted over the coming few weeks through June 2019.  During that period U.S. farmers will likely be “under duress” as they make what may be difficult late season planting decisions.

*****

2) Status of Delayed U.S. Corn Plantings Through May 26th

The U.S. Corn Belt states that have been hardest hit by wet weather, flooding and planting delays so far in 2019 are Illinois, Indiana, Michigan, Ohio, South Dakota and Wisconsin (Tables 2a-b).  Significant wet soil conditions and planting delays have also occurred in Iowa, Kansas, Minnesota, Missouri, Nebraska, and Pennsylvania.   In these are other states many U.S. farmers who have not yet been able to plant all or part of their 2019 corn acreage are considering either late plantings of corn, switching to alternative shorter season crops such as soybeans, or possibly using Prevented Planting options from the USDA Farm Service Agency.

The USDA reported that 58% of the 2019 corn crop in the 18 major states had been planted as of May 26th in its latest USDA NASS Weekly Crop Progress report (Table 2a).  In these top 18 states this amounts to 49,131,600 acres planted out of 85,350,00 acres forecast in the March 28th USDA NASS Prospective Plantings report

Extended to the entire U.S., 58% planted on 5/26/2019 would equal 53,819,360 acres planted out of the USDA Prospective Plantings forecast for the U.S. of 92,792,000 acres of corn in year 2019.   Average corn plantings in the 18 major states on May 26th over the 5-year 2014-2018 period are 90%, with 5/26/2019 corn plantings being 32% and 27,844,900 acres behind in the 18 states and an estimated 29,693,440 acres behind in the U.S. in total.

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3) 2019 U.S. Corn Production Based on the May 26thS. Planted Acres Estimate

With only 58% or an estimated 53.8 million acres of U.S. corn planted to date, production prospects for the 2019 U.S. corn crop based on what is actually planted so far are down considerably.  In the USDA May 10, 2019 World Agricultural Supply and Demand Estimates (WASDE) report, forecast 2019 corn production in the U.S. to be 15.030 billion bushels (Tables 1a, 1b, & 2b). 

 This is based on the May 26th estimate of 58% of U.S. corn planted – amounting to 53.8 million acres (ma) planted of the 92.792 ma originally intended.  Of these 53.8 ma now planted, it is estimated that 49.460 ma would be harvested (equaling latest 3-year average harvested-to-planted in the top 18 corn producing states), with a 2019 U.S. average corn yield of 175 bu/ac, and that estimated corn production would equal 8.655 billion bushels (bb) (Table 2b). 

This estimate of 2019 U.S. corn production prospects to date can be criticized for several reasons. 

First, it is likely based on too high of an estimate of % harvested-to-planted acres due to flooding and excessive moisture – having been set equal to the most recent 2016-2018 3-year average. 

Second, it can also be criticized for having 2019 U.S. corn average yields set too high at 175 bu/acre.  With delayed plantings and excessively we soils it may be more prudent to consider an 8 bu/acre lower U.S. corn yield market of 167 bu/acre.  At 167 bu/ac yields, 2019 U.S. corn production on 53.819 ma planted and 49.460 ma harvested would be 8.260 bb – down substantially from the USDA’s May 10th WASDE projection of 15.030 bb. 

Third, these early projections for 2019 of U.S. corn planted acres of 53.819 ma, and of 8.260 bb in 2019 U.S. corn production do not account for the progress that will continue to be made in U.S. corn plantings from May 26th through the month of June.  In the “new crop” MY 2019/20 U.S. corn supply-demand and price projections by Kansas State University that follow in Table 1b, it is assumed that final 2019 U.S. corn planted acreage is either 82.792 ma or 77.792 ma.

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4) Prospects for Final 2019 U.S. Corn Planted & Harvested Acres

It is assumed in the following projections by Kansas State University Extension Agricultural Economist Daniel O’Brien that substantial amounts of additional U.S. corn acreage will be planted from now through June 2019 (Table 1b).  In this analysis it is assumed that these additional plantings will leave final U.S. corn planted acreage down 10-15 ma below the USDA’s Prospective Plantings report forecast on 3/29/2019 of 92.792 ma, but still up 24-29 ma from levels represented in the May 26th planting progress estimates.

  • U.S. Corn Planted Acreage Scenarios #1 & #2: “Down 10 ma 2019 U.S. Corn Plantings”:

As shown in Table 1b, IF 82.792 ma of corn is eventually planted in the U.S. in 2019, total corn plantings would be down 10 ma from initial USDA projections of 92.792 ma in the March 29th USDA Prospective Plantings report.  However, they would also represent an additional 28.973 ma yet to be planted in year 2019 from May 26th levels. 

Due to wet soils and flooded fields in many areas, the national percent harvested-to-planted is forecast to be 88.0%, just above the recent low of 87.9% in year 2002. Harvested acreage estimated to be 72.857 ma – down from 84.500 ma in the USDA’s May 10th WASDE report.

  • S. Corn Planted Acreage Scenarios #3 & #4: “Down 15 ma 2019 U.S. Corn Plantings”:

Also shown in Table 1b, IF 77.792 ma of corn is eventually planted in the U.S. in 2019, total corn plantings would be down 15 ma from initial USDA projections of 92.792 ma in the March 29th Prospective Plantings report.  However, they would also represent an additional 23.973 ma yet to be planted in year 2019 from May 26th levels. 

Also due to the prevalent wet soils and flooded fields in many areas, the national percent harvested-to-planted is forecast at 88.0%, with harvested acreage estimated to be 68.457 ma – down from 84.500 ma in the USDA’s May 10th WASDE report.

*****

5) Prospects for U.S. Corn Supply-Demand & Prices in “New Crop” MY 2019/20

Given the KSU 2019 U.S. corn reduced planted and harvested acre projections in Table 1b, projected 2019 U.S. corn production is substantially lower than the USDA’s May 10th WASDE forecast of 15.030 bb.  For the “new crop” 2019/20 marketing year to begin on September 1, 2019, this leads to substantially reduced U.S. corn supplies, significant rationing of U.S. corn usage and tightening of ending stocks and stocks-to-use and much higher U.S. corn prices.  The first scenario represents the USDA projection for “new crop” MY 2019/20 from the May 10, 2019 WASDE report.

Alternative scenarios for 2019 U.S. corn acreage and yields are presented in Figures 5 & 6, with varying 2019 U.S. corn production scenarios in Figure 7.  Alternative U.S. corn ending stocks-to-use scenarios for “new crop” MY 2019/20 are presented in Figures 12-a-b, while the relationship that has existed between U.S. corn percent (%) ending stocks-to-use and U.S. Average Corn prices is shown in Figure 13

Scenario A. USDA May 2019 WASDE Forecast for “New Crop” MY 2019/20 – 0% Probability:

Planted Acres                                     92.792 million acres (ma)

Harvested Acres                                  85.400 ma

% Harvested-to-Planted                      92.0%

U.S. Average Corn Yield                       176 bu/ac

Beginning Stocks                                 2.095 billion bushels (bb)

2019 U.S. Corn Production                15.030 bb

Imports                                                  0.035 bb

Total U.S. Corn Supply                       17.160 bb

Ethanol for Fuel Use                            5.500 bb

Food & Industrial Use                            1.435 bb

Seed Use                                                0.030 bb

Exports                                                    2.275 bb

Feed & Residual Use                               5.450 bb

Total U.S. Corn Use                             14.675 bb

Ending Stocks                                          2.485 bb

% Ending Stocks-to-Use                       16.93%

U.S. Corn Season Avg. Farm Price           $3.30 /bu

Note: With the planting problems that have occurred in the U.S. in April-May 2019, the May 10th WASDE market scenario for “new crop” MY 2019/20 has virtually no likelihood of occurring.

 

Scenario #1MY 2019/20-KSU: Less 10 mln ac Planted, 172 bu/ac Yield, 12.531 bb Crop – 35% Probability:

Planted Acres                                     82.792 million acres (ma)                           (less 10 ma vs USDA)

Harvested Acres                                  72.857 ma                                                       (less 12.5 ma vs USDA)

% Harvested-to-Planted                    88.0%                                                                (less 4.0% vs USDA)

U.S. Average Corn Yield                    172 bu/ac                                                        (less 4.0 bu/ac vs USDA)

Beginning Stocks                                  2.095 billion bushels (bb)

2019 U.S. Corn Production              12.531 bb                                                        (less 2.499 bb vs USDA)

Imports                                                   0.035 bb

Total U.S. Corn Supply                     14.661 bb                                                       (less 2.499 bb vs USDA)  

Ethanol for Fuel Use                           5.250 bb                                                        (less    250 mb vs USDA)

Food & Industrial Use                         1.420 bb                                                          (less      15 mb vs USDA)

Seed Use                                                0.032 bb                                                        (up          2 mb vs USDA)

Exports                                                    1.709 bb                                                       (less    566 mb vs USDA)

Feed & Residual Use                            5.000 bb                                                          (less    450 mb vs USDA)

Total U.S. Corn Use                           13.411 bb                                                        (less  1.235 bb vs USDA)

Ending Stocks                                         1.250 bb                                                        (less  1.235 bb vs USDA)

% Ending Stocks-to-Use                         9.32%                                                        (less      7.61% vs USDA)

U.S. Corn Season Avg. Farm Price        $4.35 /bu                                                    (up  $1.05 /bu vs USDA)

Note: In this scenario, significant rationing of grain use occurs, with prices increasing to make that occur.   

******

 

Scenario #2MY 2019/20-KSU: Less 10 mln ac Planted, 167 bu/ac Yield, 12.167 bb Crop – 35% Probability:

Planted Acres                                     82.792 million acres (ma)                           (less 10 ma vs USDA)

Harvested Acres                                   72.857 ma                                                      (less 12.5 ma vs USDA)

% Harvested-to-Planted                       88.0%                                                            (less 4.0% vs USDA)

U.S. Average Corn Yield                    167 bu/ac                                                        (less 9.0 bu/ac vs USDA)

Beginning Stocks                                  2.095 billion bushels (bb)

2019 U.S. Corn Production              12.167 bb                                                       (less 2.863 bb vs USDA)

Imports                                                 0.035 bb

Total U.S. Corn Supply                    14.297 bb                                                       (less 2.863 bb vs USDA)  

Ethanol for Fuel Use                          5.225 bb                                                        (less    275 mb vs USDA)

Food & Industrial Use                         1.420 bb                                                         (less      15 mb vs USDA)

Seed Use                                             0.032 bb                                                         (up          2 mb vs USDA)

Exports                                                1.570 bb                                                         (less    705 mb vs USDA)

Feed & Residual Use                          4.950 bb                                                         (less    500 mb vs USDA)

Total U.S. Corn Use                        13.197 bb                                                        (less  1.478 bb vs USDA)

Ending Stocks                                         1.100 bb                                                      (less  1.385 bb vs USDA)

% Ending Stocks-to-Use                         8.34%                                                      (less      8.59% vs USDA)

U.S. Corn Season Avg. Farm Price    $5.45 /bu                                                     (up  $2.15 /bu vs USDA)

Note: In this scenario, further significant rationing of grain use occurs, with prices increasing to over $5.00 to make that occur on very limited supplies.  The implicit assumption in these supply-demand scenarios is that U.S. corn markets are likely to be reticent to allow U.S. corn ending stocks to move much below 1.0 bb.    

*****

 

Scenario #3MY 2019/20-KSU: Less 15 mln ac Planted, 172 bu/ac Yield, 11.775 bb Crop – 15% Probability:

Planted Acres                                     77.792 million acres (ma)                           (less 15 ma vs USDA)

Harvested Acres                                   68.457 ma                                                       (less 16.9 ma vs USDA)

% Harvested-to-Planted                       88.0%                                                                (less 4.0% vs USDA)

U.S. Average Corn Yield                      172 bu/ac                                                        (less 4.0 bu/ac vs USDA)

Beginning Stocks                                 2.095 billion bushels (bb)

2019 U.S. Corn Production             11.775 bb                                                        (less 3.255 bb vs USDA)

Imports                                                0.035 bb

Total U.S. Corn Supply                    13.905 bb                                                        (less 3.255 bb vs USDA)  

Ethanol for Fuel Use                          5.150 bb                                                        (less    350 mb vs USDA)

Food & Industrial Use                          1.400 bb                                                         (less      35 mb vs USDA)

Seed Use                                              0.033 bb                                                         (up          3 mb vs USDA)

Exports                                                 1.472 bb                                                         (less    803 mb vs USDA)

Feed & Residual Use                            4.850 bb                                                         (less    600 mb vs USDA)

Total U.S. Corn Use                          12.905 bb                                                        (less  1.770 bb vs USDA)

Ending Stocks                                       1.000 bb                                                         (less  1.485 bb vs USDA)

% Ending Stocks-to-Use                    7.75%                                                            (less      9.18% vs USDA)

U.S. Corn Season Avg. Farm Price      $5.70 /bu                                                     (up  $2.40 /bu vs USDA)

Note: In this scenario, with only 77.792 ma planted and production of 11.775 bb, ending stocks fall to 1.000 bb and prices increase to $5.70 /bu to ration usage.    

*****

 

Scenario #4MY 2019/20-KSU: Less 15 mln ac Planted, 167 bu/ac Yield, 11.432 bb Crop – 15% Probability:

Planted Acres                                    77.792 million acres (ma)                           (less 15 ma vs USDA)

Harvested Acres                                  68.457 ma                                                       (less 16.9 ma vs USDA)

% Harvested-to-Planted                    88.0%                                                                (less 4.0% vs USDA)

U.S. Average Corn Yield                    167 bu/ac                                                        (less 9.0 bu/ac vs USDA)

Beginning Stocks                                  2.095 billion bushels (bb)

2019 U.S. Corn Production              11.432 bb                                                        (less 3.598 bb vs USDA)

Imports                                                   0.035 bb

Total U.S. Corn Supply                     13.562 bb                                                        (less 3.598 bb vs USDA)  

Ethanol for Fuel Use                           5.100 bb                                                        (less    400 mb vs USDA)

Food & Industrial Use                         1.400 bb                                                         (less      35 mb vs USDA)

Seed Use                                                0.033 bb                                                       (up          3 mb vs USDA)

Exports                                                    1.379 bb                                                         (less    896 mb vs USDA)

Feed & Residual Use                            4.750 bb                                                         (less    700 mb vs USDA)

Total U.S. Corn Use                           12.662 bb                                                        (less  2.013 bb vs USDA)

Ending Stocks                                         0.900 bb                                                        (less  1.585 bb vs USDA)

% Ending Stocks-to-Use                         7.11%                                                          (less      9.18% vs USDA)

U.S. Corn Season Avg. Farm Price    $6.00 /bu                                                      (up  $2.70 /bu vs USDA)

Note: In this scenario, with only 77.792 ma planted and production of 11.432 bb, ending stocks fall below 1.000 bb down to 900 mb, with U.S. corn prices increasing to near $6.00 /bu to further ration usage.    

KSU Weekly Grain Market Update – The position of grain markets just prior to the USDA Reports on 5/10/209

Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, May 10, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The recorded radio program will be aired at 10:03 a.m. central time, Friday, May 10, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the May 10th recording is be available at the KSU Agriculture Today website at this time.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

KSU Weekly Grain Market Update (5/3/2019) – 2019 Corn Planting Problems, Kansas Wheat Tour Results, and Positive Feedgrain Export Trends

Corn Market Decision Time re: Planting Prospects

and

Examining 2019 Kansas Wheat Tour Results

Daniel M. O’Brien, Extension Agricultural Economist-Kansas State University

May 3, 2019

Point #1) Delayed U.S. Corn Plantings in May 2019

The situation with 2019 U.S. corn plantings as of May 3, 2019 is the following.  First, as of April 28th the USDA reports that corn plantings are delayed in several key corn producing states in the U.S. Corn Belt – most notably in Illinois (9% vs 43% 5-yr avg), Minnesota (2% vs 24% 5-yr avg), Indiana (2% vs 17% 5-yr avg), and Ohio (2% vs 13% 5-yr avg).  Plantings in Iowa, Kansas, Missouri, Nebraska, North Carolina, North Dakota, and Tennessee are also trailing the most recent 5 year average pace, but not a seriously as in IL, MN, IN, and OH.  With credible weather service forecasts for significant rainfall over many of these central and eastern U.S. Corn Belt states over the next week, prospects for timely plantings of 2019 U.S. corn acres are declining in a quantifiable manner.

Corn futures markets have not responded to this decline in 2019 U.S. corn planting and associated production prospects.  Within the next 1-2 weeks it seems these issues of 2019 U.S. corn planting prospects, how plantings could affect 2019 U.S. corn production, supply-demand balances, and expected corn prices for what remains of the “current crop” 2018/19 marketing year (MY) through August 31, 2019, and for “new crop” MY 2019/20 will all likely have to be dealt with by the corn futures and cash markets.

If the 2019 U.S. corn crop is planted in a timely manner, then it will have fully adequate soil moisture to begin development with – and which could provide for growth from May through June and into July.

However, if instead of the 92.792 million acres (ma) projected for year 2019 by the USDA in the Prospective Plantings report on March 29th, actual 2019 U.S. corn plantings are reduced by 5% down to 88.152 ma, or by 10% down to 83.513 ma, it would likely have significant, tangible, negative impacts on 2019 U.S. corn production.

At its current projection of 92.792 ma planted, 84.723 ma harvested (91.30% harvested to planted acres), and 176.4 bu/ac yields, the USDA is implicitly forecasting U.S. corn production in year 2019 would be 14.945 billion bushels

However, IF 2019 U.S. corn plantings decline 5% to 88.152 ma, then with 91.30% harvested-to-planted acres, there would be 80.486 ma harvested.  And with the same 176.4 bu/ac yield, U.S. corn production would be 14.198 bbdown 747 mb from the initial USDA implicit forecast of 14.945 bb.

In addition, IF U.S. corn plantings are down 10% from the USDA projection to 83.513 ma, then using the same harvested-to-planted acres factor of 91.30% to figure 2019 U.S. corn harvested acres at 76.247 ma, and using 176.4 bu/ac again, then 2019 U.S. corn production would fall to 13.450 bb down 1.495 bb from the USDA’s initial levels of 14.945 bb 2019 U.S. corn production.

Therefore, either a 5% or especially a 10% reduction in U.S. 2019 Corn planted acres would have significant negative impacts on U.S. corn production in 2019, leading to much tighter U.S. corn ending stocks, and higher cash prices as usage would be rationed on smaller supplies.

Point #2) Examining the Results of the 2019 Kansas Wheat Tour

This week’s 2019 Kansas Wheat Tour projected the 2019 Kansas wheat yield to be 47.2 bu/ac, with an implicit harvested acreage estimate of 6.494 million acres (92.8% harvested-to-planted acres off of 7.000 ma planted), and 2019 Kansas wheat production of 306,500,000 bushels (i.e., 306.5 million bushels or mb).   According to KSU Extension Agronomist Romulo Lulato ( lollato@ksu.edu), the Kansas wheat crop is 3 to 4 weeks behind normal in maturity, with the next month being crucial to crop development and possible disease threats.

Since year 2014, the annual Kansas Wheat Tour has UNDER-forecast Kansas wheat production by 10.4% (in 2015), 18.2% (in 2016), 15..6% (in 2017), and 12.3% (in 2018).  The reason for this under estimate of Kansas production in recent years has been a combination of underestimated yields, and especially low projections of harvested acreage.   During the years 2011-2018 period the Kansas Wheat Tour underestimated final Kansas wheat harvested acres each year, ranging from 4% too low in 2016 to 13.7% in 2011.  For instance, in 2018 Kansas harvested acres of wheat were implicitly forecast to be 6.576 ma, but ended up being 7.300 ma as estimated by USDA.  Following the same trend, it is possible the implicit harvested acreage of 6.494 ma for wheat in Kansas for 2019 could end up being too low.

Finally, total Hard Red Winter (HRW) wheat production in the central and southern plains states of Nebraska, Colorado, Kansas, Oklahoma and Texas is forecast to be 638 million bushels (mb) in 2019, up from 523 mb for these states in 2018, but comparable to 635 mb in 2017, 870 mb in 2016, and 655 mb in 2015.  The 2019 forecast for Texas came from KSU Calculations, while those for Kansas, Nebraska, Colorado, and Oklahoma came from the 2019 Kansas Wheat Tour.

An additional factor to watch as the 2019 Kansas wheat crop develops will be the levels of protein and/or other quality factors.  It is likely that significant amounts of the high protein / good quality 2018 Kansas wheat crop likely still in storage in Kansas grain elevators.  As a result, IF the 2019 Kansas wheat crop were of lower protein / quality, THEN it is likely that carryover supplies from the higher protein/higher quality 2018 crop would be blended with the 2019 crop to enhance marketability.

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Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, May 3, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The recorded radio program will be aired at 10:03 a.m. central time, Friday, May 3, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the April 26th recording is be available at the KSU Agriculture Today website at this time.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

KSU Weekly Grain Market Analysis Through 4/26/2019 – Watching Weather for Corn Planting plus Positive Sorghum and HRW Wheat Exports Weeks

Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, April 26, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The recorded radio program was aired at 10:03 a.m. central time, Friday, April 26, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the April 26th recording is be available at the KSU Agriculture Today website at this time.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

Corn Market Review – DEC 2019 Corn Trends, CFTC Position Data, Carry Issues, and a 1st Week in May Reckoning for Planting Concerns

This Corn Market Review from the Kansas State University Agricultural Economics Department (Daniel O’Brien – Author) will be placed on on the www.AgManager.info website at on April 22nd at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

Following is the text of the article, with selected figures included at the end.

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Corn Market Review KSU Ag Economics

Daniel O’Brien, Extension Agricultural Economist, Kansas State University

Friday, April 19, 2019

With wet soils persisting in much of the U.S. Corn Belt, spring fieldwork and planting operations have begun to be been delayed.  As of April 19th U.S. corn markets have shown only limited signs of concern about potential 2019 U.S. corn crop planting delays or impacts upon U.S. corn production prospects.

 

1) “New Crop” DEC 2019 Corn Futures Trending Lower

Corn futures have been moderately “bearish” during the month April 2019 to date.  Since April 1st, “new crop” DEC 2019 Corn futures have traded in the range of a low of $3.84 ½ (on 4/1) to a high of $3.93 ½ (on 4/4) – closing at $3.86 ¼ on Thursday, April 18th.  In comparison, during the December 2018 – March 2019 period “new crop” DEC 2019 corn had traded in a range of $4.06 (on 1/18) to $3.84 ¼ (on 3/29). 

 

2) Placing a Market Value on “New Crop” 2019 Corn Price Uncertainty

On April 18th MAY 2019 Corn futures closed at $3.58 ¼ compared to $3.86 ¼ for DEC 2019 Corn.  The $0.28 /bu increase from MAY 2019 to DEC 2019 Corn futures provides some indication of the amount of uncertainty that exists in corn futures traders minds about seasonal production risks they are willing to account for in their “new crop” 2019 corn bids (relative to the present).  

 

3) Long Term Corn Price Expectations in Years 2020-2022

Whereas on April 18th MAY 2019 Corn futures closed at $3.58 ¼ compared to $3.86 ¼ for DEC 2019 Corn, these prices compare to longer term prices of $4.14 ¼ for DEC 2020 Corn, and $4.19 ¼ – $4.19 ½ for DEC 2021 & DEC 2022 Corn futures

As of today, looking two-to-four years ahead, when the corn market has little to go on other than current “old crop” and early “new crop’ supply-demand and prices, corn market price expectations for harvest in years 2020, 2021 and 2022 are in the $4.14-$4.19 per bushel range.  These price levels are up an additional $0.28-$0.32 per bushel from harvest 2019 corn futures as expressed by DEC 2019 Corn futures at $3.86 ¼ /bu, and up 15%-17% from current MAY 2019 Corn futures prices at $3.58 ¼ /bu.   

From an economic viewpoint, these deferred years’ DEC Corn futures prices in years 2020, 2021, & 2022 reflect market expectations that corn prices will eventually be higher than current bids for DEC 2019 Corn futures.  As part of these expectations, they also reflect market uncertainty about and the eventual likelihood of a short U.S. corn crop or crops sometime in the coming years – it is just not known when!

 

4) “Open Interest” – Indicating the Focus of Corn Futures

Corn futures contract open interest can be used as an indicator of the attention and/or focus in the corn trade on particular futures contracts and the time periods they represent.  “Open interest” in corn futures is the total number of outstanding “long” (i.e. buy position) or “short (sell position) contracts that remain open and have not been exited at any one time.  

As of April 18th, MAY 2019 Corn futures had 381,269 contracts (or 1.906 bb) in open interest, compared to 739,574 contracts (3.698 bb) for JULY 2019 Corn futures, 207,894 contracts (1.039 bb) in open interest for SEPT 2019 Corn futures, and 291,847 contracts (1.459 bb) for DEC 2019 Corn futures.  For selected deferred harvest-time corn futures contracts, DEC 2020 Corn had open interest of 31,435 contracts (157 million bushels or ‘mb’), while DEC 2021 Corn had open interest of 931 contracts (4.655 mb), and DEC 2021 Corn had open interest of 16 contracts (80,000 bushels).

These numbers indicate that most of the attention of the U.S. Corn futures market is on the MAY 2019 and especially the JULY 2019 Corn futures contracts, with lesser attention on SEPT 2019 and DEC 2019 Corn

 

5) Focus on Futures Carrying Charges & How MAY 2019 Affects DEC 2019 Corn

While most of the open interest in corn futures is concentrated in the two lead contracts (i.e., MAY 2019 and JULY 2019 Corn), the consistency of carrying charges from the MAY 2019 through DEC 2019 Corn futures causes movements in the upfront MAY 2019 Corn futures to influence or lead to changes in DEC 2019 Corn futures.  At this time, “price transmission” or at least a strong correlation is occurring between movements in the lead “current” marketing year contract (MAY 2019 Corn) and the 1st “new crop” contract (DEC 2019 Corn futures).

For example, on April 18th the following carrying charges existed in Corn futures contract prices.  The MAY 2019 to JULY 2019 corn futures carrying charge, “carry, or “spread” was $0.0875 /bu or $0.04375 /bu/mo.  Then, from the JULY 2019 to the SEPT 2019 contract, the carry was $0.0775 /bu or $0.03875 /bu/mo.  Further, the SEPT 2019 to DEC 2019 carrying charge was $0.1125 /bu or $0.0375 /bu/mo. 

As an indicator of possible grain market dynamics or changes, if and/or when the SEPT 2019 to DEC 2019 Corn futures carrying charge begins to weaken appreciably from its current level of $0.1125 /bu or $0.0375 /bu/mo, it may indicate that the Corn market is beginning to anticipate a large 2019 U.S. corn crop as it begins to discount harvest 2019 Corn futures prospects.  This would lead to a weakening trend in DEC 2019 corn futures into late summer and the 2019 fall harvest.

 

6) Managed Money (Spec) & Commercial Trader Positions in Corn Futures (CFTC Data)

The “bearish” position of the corn futures market is shown in futures trade positions within the last few weeks.  As reported by Commodity Futures Trading Commission (CFTC) trader position data, for the week ending April 16, 2019 Managed Money (Spec) traders indicate that a record “short” or “sell” position of 2.549 billion bushels (bb), based on 509,846 contracts @ 5,000 bu/contract.  The 2nd largest short position for Management Money (Spec) traders since at least June 2006 occurred a month ago for the week ending March 12, 2019 at 483,417 contracts (2.417 bb).  

There were also “long” or “buy” positions of 915 million bushels (mb) from 182,959 contacts for Managed Money (Specs) for the week ending 4/16/2019.  When combined, there was a record “net short” managed money position of 1.634 bb in corn futures for the week ending April 16, 2019 – the most recent available public record of trading data.  The previous record “net short” managed money position occurred for the week ending April 9, 2019 with 1.449 bb in corn futures “net short”.

Also of note, as of the week ending April 16th, Commercial Traders in Corn futures had a record large long or “buy” position in Corn futures of 575,164 contracts (2.876 bb), combined with a short or “sell” position of 608,567 contracts (3.043 bb).  The record high short or “sell” position for Corn futures since mid-year 2006 1,001,517 contracts (5.008 bb) for the week ending May 29, 2018.   It appears that commercial buyers of corn are taking advantage of the current low prices in Corn futures to hedge against the possibility of rising prices later in 2019.

 

7) The Beginning of 2019 Field Work & U.S. Corn Planting Issues to Come 

As of April 14th the USDA reported in it’s NASS Crop Progress Report that U.S. corn plantings were 3% complete compared to an average of 5% for the same time period during the 2014-2018 period.   Corn planting had progressed to 57% complete in Texas (vs 54% 5-year avg.), 16% in Tennessee (vs 14% 5-yr avg.), and 8% in Kentucky (vs 8% 5-yr avg.). 

But in the key “Three ‘I’ States” in the central U.S. Corn Belt, planting had not started in Illinois (vs a 4% 5-year average), had 1% planted in Indiana (vs 1% 5-year avg.), and had not started in Iowa (vs a 2% 5-year avg.).   In other key Corn Belt states affected by recent excess moisture, corn planting was 6% complete in Kansas (vs 14% 5-year avg.), had not started in Nebraska (vs 2% 5-year avg.), had not started in Minnesota (vs 2% 5-year avg.), and was 18% completed in North Carolina (vs 28% 5-year avg.). 

Consistent with the corn futures market bearish perspective, it seems too early for corn futures to express worries about wet soil conditions, delayed corn planting, and reduced corn acreage in 2019 (which could lead to reduced 2019 U.S. corn production and a tightening of the U.S. Corn Supply-Demand Balance sheet and higher corn prices in “new crop” MY 2019/20. 

The University of Illinois’ Farmdoc recent analysis titled “Here We Go Again: How Many Days Does It Take to Plant the U.S. Corn Crop” by Scott Irwin and Todd Hubbs on April 17th addressed this issue: https://farmdocdaily.illinois.edu/2019/04/here-we-go-again-how-many-days-does-it-take-to-plant-the-u-s-corn-crop.html

Quoting from their analysis concerning the key “Three ‘I’ States”: “The results indicate that it takes about 14 days, or two weeks, to plant the corn crop in each of the three states assuming maximum daily rates of planting progress and this conclusion is not altered by the addition of observations for 2018.”

These results from Irwin and Hubbs in Illinois indicate that the U.S. corn market would likely grow more concerned about potential 2019 planting delays in the U.S. Corn Belt if appreciable progress was not being made and appeared unlikely to occur in the first week of May 2019.  Until then, the Corn market is likely to continue to monitor the situation, but not to act in a “worried manner” until then.

KSU Weekly Grain Market Analysis Through 3/17/2019 – Floods, Wet Fields and Prospects for Delayed Field Work / Corn Planting

Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, March 15, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://agmanager.info/grain-marketing/grain-market-outlook-newsletter/weekly-grain-market-review

The recorded radio program was aired at 10:03 a.m. central time, Friday, March 15, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the March 15th recording is be available at the KSU Agriculture Today website at this time.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…