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USDA-WASDE FORECAST #579 July 12th 2018

07/13/2018

OVERVIEW

The July 12th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress, long-range weather forecasts and historical records. Harvest areas for corn and soybeans were updated from the June projection to 81.8 million acres (83.1 million in 2017) and 88.9 million acres, (89.5 million acres in 2017) respectively. The USDA held corn yield to 174.0 bushels per acre (175.4 bushels in 2017). Soybean yield was retained at 48.5 bushels per acre (49.5 bushels in 2017). The USDA July projection of ending stock for corn was reduced 0.3 percent to 1,552 million bushels. Ending stock for soybeans was raised 50.6 percent to 580 million bushels compared to the June 2018 WASDE Report.

The USDA projections of ending stocks and prices take into account current uncertainties concerning announced tariffs on U.S. products.

CORN

The projection of the corn harvest decreased by 1.3 percent from the June 2018 Report to 14,230 million bushels consistent with the reality that the crop is now in the stage of silking. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down 7.3 percent from the 2016 near-record harvest of 15,148 million bushels. The “Ethanol and Byproducts” category was lowered 0.9 percent to 5,625 m. bushels and exports were raised 25 m bushels to 2,225 million bushels. “Feed and Residual” was raised by 75 m. bushels to 5,425 million bushels resulting in a corresponding decrease of 1.6 percent in ending stocks to 1,552 m. bushels. The projected USDA range in farm price was reduced by 10 cents per bushel on both ends of the range to 330 to 430 cents per bushel. At 14H30 on July 13th CME quotations for July and September 2018 corn were 332 cents and 340 cents per bushel respectively.

JULY 2018 WASDE #579 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 174.0 bushels per acre (was175.4 bushels per acre in 2017)

Beginning Stocks 2,027 m. bushels

Production 14,230 m. bushels

Imports 50 m. bushels

Total supply 16,307 m bushels Proportion of Supply

Feed & residual 5,425 m. bushels 33.2%

Food & Seed 1,480 m. bushels 9.1%

Ethanol & byproducts 5,625 m. bushels 34.5 %

Domestic Use 12,530 m. bushels 76.8%

Exports 2,225 m. bushels 13.7%

Ending Stocks 1,552 m. bushels 9.5%

Stock-to- domestic use proportion 9.5% (Was 12.6% in the June 2018 WASDE Report)

Average Farm Price: $3.30 to $4.30 per bushel . (Down 10 cents per bushel on both ends of the range compared to the June 2018 WASDE Report)

*m.=million

SOYBEANS and SOYBEAN MEAL

USDA updated the projected soybean harvest from the June WASDE Report to 4,300 million bushels with a yield of 48.5 bushels per acre. Use parameters were essentially unchanged from the June 2018 WASDE Report except that crushings were increased by 2.3 percent to 2,045 m. tons. The major change was in Projected exports were down a noteworthy 10.9 percent to 2,040 million bushels due to retaliatory tariffs imposed by China. Ending stocks were increased by 50.6 percent to 580 million bushels. The USDA projection of the ex-farm price for soybeans for the 2018 harvest was down 75 cents per bushel on both ends of the range to 800 cents to 1,050 cents per bushel. At 14h30 on July 13th CME quotations for soybeans for July and September 2018 delivery were 931 cents (a decade low) and 924 cents per bushel respectively.

Projected output of soybean meal was raised from the June 2018 WASDE to 48.1 million tons. Domestic use was raised 300,000 tons but exports were raised 700 million tons. The USDA lowered the projection of soybean meal prices to a range of $315 to $370 per ton. At close of trading on June 12 th CME quotations for July and September 2018 deliveries of soybean meal were $353 and $355 respectively.

JULY 2018 WASDE #579 ESTIMATE FOR THE 2018 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area 88.9m. acres (89.6 m. acres planted, corresponding to 99.2% of planted acreage )

Yield 48.5 bushels per acre (was 49.5 bushels/acre in 2017)

Beginning Stock 465m. bushels

Production 4,310m bushels

Imports 25m. bushels

Total Supply 4,800m bushels Proportion of Supply

Crushings 2,045m. bushels 42.6%

Exports 2,040m. bushels 42.6% (was 47.6%)

Seed 103m. bushels 2.1%

Residual 32 m. bushels 0.7%

Total Use 4,220 m. bushels 87.9%

Ending Stocks 580m. bushels 12.1%

Average Farm Price: 800 to 1,050 cents per bushel (Down 75 cents per bushel from the June 2018 WASDE Report)

Soybean Meal

Beginning Stocks 0.400 m. tons

Production 48.450 m. tons

Imports 0.350 m. tons

Total Supply 49.200 m. tons

Domestic Use 35.700 m. tons

Exports 13.100 m. tons

Total Use 48.800 m. tons

Ending Stocks 0.400 m. tons

Average Price ex plant : $315 to $355 per ton (Down $15 per ton on both ends of the June 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 1.337 593

Supply 1.558 705

World trade 196 181

Use 1.378 501

Ending stocks 179 117

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