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USDA-WASDE FORECAST #582 October 11th 2018

10/11/2018

Corn and soybean crops will be the second largest ever but will be harvested during a time of uncertainty regarding previously projected, anticipated and actual export volumes. The USDA projections of ending stocks and hence prices for corn and soybeans take into account current announced tariffs on U.S. products but do not reflect predicted or threatened tariffs, intensification or unlikely resolution of trade conflicts.

CORN

The projection of the corn harvest was raised 0.3 percent from the September WASDE Report to 14,778 million bushels consistent with the reality that 93 percent of the crop is mature and 34 percent has been harvested. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down only 2.4 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained at 5,650 m. bushels and exports were raised 75 m bushels to 2,475 million bushels. "Feed and Residual" was lowered by 25 m. bushels to 5,550 million bushels. Ending stocks will increase 2.2 percent to 1,813 m. bushels. The projected USDA range in farm price was unchanged over a range to 300 to 400 cents per bushel. At 13H00 on October 11th CME quotations for December 2018 and March 2019 corn were 397 cents and 381 cents per bushel respectively.

OCTOBER 2018 WASDE #582 ESTIMATE FOR THE 2018 CORN HARVEST:

Harvest Area 81.8 m* acres (89.1 m. acres planted, corresponding to 91.8 % of area harvested)
Yield 180.7 bushels per acre (was175.4 bushels per acre in 2017, 181.3 bushels Sept. WASDE)
Beginning Stocks 2,140 m. bushels
Production 14,778 m. bushels
Imports 50 m. bushels
Total supply 16,968 m bushels Proportion of Supply
Feed & residual 5,550 m. bushels 32.7%
Food & Seed 1,480 m. bushels 8.7%
Ethanol & byproducts 5,650 m. bushels 33.3 %
Domestic Use 12,680 m. bushels 74.7%
Exports 2,475 m. bushels 14.6%
Ending Stocks 1,813 m. bushels 10.7%

Stock-to- domestic use proportion 14.3% (Was 14.0% in the September 2018 WASDE Report)

Average Farm Price: $3.00 to $4.00 per bushel . (Unchanged from September WASDE)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA updated the projected soybean harvest fractionally from the September WASDE Report to 4,690 million bushels due to a revised yield of 53.1 bushels per acre. Use parameters were essentially unchanged from the September 2018 WASDE Report with crushings at 2,070 m. tons. Projected exports were held to 2,060 million bushels following an anticipated decline of 10.9 percent documented in July due to retaliatory tariffs imposed by China. Ending stocks were increased by 4.7 percent to 885 million bushels. The USDA projection of the ex-farm price for soybeans for the 2018 harvest was unchanged from September over a range of 735 cents to 985 cents per bushel. At 13h00 on October 11th CME quotations for soybeans for November 2018 and March 2019 delivery were 858 cents and 884 cents per bushel respectively.

Projected output of soybean meal was retained from the September 2018 WASDE at 48.95 million tons. Domestic use was held at 35.8 million tons. Exports were retained at 13.5 million tons despite an uncertain trade environment. The USDA retained the projection of soybean meal prices over a range of $290 to $330 per ton. At 13H00 on October 11th CME quotations for October 2018 and March 2019 deliveries of soybean meal were $315 and $317 respectively.

OCTOBER 2018 WASDE #582 ESTIMATE FOR THE 2018 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 88.2m. acres (89.1 m. acres planted, corresponding to 99.0% of planted acreage )
Yield 53.1 bushels per acre (was 49.5 bushels/acre in 2017, 52.8 bushels on Sept. WASDE)
Beginning Stock 438m. bushels
Production 4,690m bushels
Imports 25m. bushels
Total Supply 5,153m bushels Proportion of Supply
Crushings 2,070m.bushels 40.2%
Exports 2,060m. bushels 40.6%
Seed 103m. bushels 2.0%
Residual 34 m. bushels 0.7%
Total Use 4,268 m. bushels 83.5%
Ending Stocks 885 m. bushels 16.5%

Average Farm Price: 735 to 985 cents per bushel (Unchanged from the Sept. 2018 WASDE Report)

Soybean Meal

Beginning Stocks 0.400 m. tons
Production 48.950 m. tons
Imports 0.350 m. tons
Total Supply 49.700 m. tons
Domestic Use 35.800 m. tons
Exports 13.500 m. tons
Total Use 49.300 m. tons
Ending Stocks 0.400 m. tons

Average Price ex plant : $290 to $330 per ton (Unchanged from the Sept. 2018 WASDE Report)

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest stable to slightly increased production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic use and exports.

  • For each 10 cents per bushel change in corn:-

  • The cost of egg production would change by 0.45 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound

  • For each $10 per ton change in the cost of soybean meal:-

  • The cost of egg production would change by 0.40 cent per dozen

  • The cost of broiler production would change by 0.25 cent per live pound.

 

WORLD SITUATION

Updated World production and use of total grains and oilseeds is summarized for the 2017/2018 season taking into account Northern and Southern Hemisphere production are:-

Factor m.tons. Coarse grains Oilseeds
Output 1.343 604
Supply 1.571 716
World trade 200 182
Use 1.385 500
Ending stocks 186 124

(1 metric ton corn= 40 bushels) ("ton" represents 2,000 pounds)