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New COVID Fears Weigh on Ag Prices

Higher prices in general are expected to bring more acreage into production next year

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Ukraine Crop Update

  • APK-Inform decreased its estimate of Ukraine’s corn crop to 29.0 million tonnes from 31.8 million previously, compared to 35.9 million last year.
  • The corn export estimate was reduced to 23 million tonnes from 25.2 million, below USDA’s forecast 24.0 million and the 29 million shipped last year.
  • Significant dryness affected the corn crop at the end of the season and continued for much of the winter crop planting.
  • The Economy Ministry estimates 8.07 million hectares of winter crops were planted, down 9.3%, or 830,000 hectares, from last year.
  • Winter wheat planted area declined considerably to 6.1 million hectares (15.1 million acres) from 6.65 million hectares (16.4 million acres) last year.

FBN’s Take On What It Means: The drought stunted corn crop is keeping Ukraine’s prices up relative to other exporters and is helping the US to be the best priced. Weather conditions for winter crops have been non-threatening so far in December, and spring weather will be the biggest factor on production. However, Ukraine produces very little spring wheat (averaging less than 200,000 hectares), so unlike Russia, when winter wheat acreage is reduced, there is not an opportunity to boost overall wheat production by planting more spring wheat.

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Vantage 2021 Acreage Estimates

  • IEG Vantage (Informa) decreased its US corn planted acreage projection to 91.16 million acres from 91.74 million, very close to this year’s 91 million.
  • The soybean acreage forecast rose to 89.4 million acres from 89.1 million previously, up significantly from this year’s 83.1 million.
  • Winter wheat acreage was projected at 31.9 million acres, up from 31.5 million previously and last year’s 30.4 million.
  • “Other spring” wheat acreage was forecast at 11.7 million acres, down from 12.7 million previously and 12.25 million last year.
  • The projected area for durum wheat was unchanged at 1.8 million acres, up from 1.7 million acres this year.

FBN’s Take On What It Means: The battle for acres will continue through the winter. Higher prices in general are expected to bring more acreage into production next year as there is less incentive for prevent-plant. Given the current bean/corn price ratio of 2.58:1, it is not a surprise that more acres are forecast to come into soybean production.

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