USDA’s August Update Bearish for Corn
Planted area was estimated at 90 million acres with production forecast at 13.9 billion bushels. USDA’s acreage estimate was above the high-end of trade expectations as well as FBN’s estimate.
That shot corn futures down sharply for the day, but futures already were under pressure from a weaker Argentine peso ahead of the reports.
Soybean acres were estimated at 76.7 million, in line with FBN’s expectations at 77 million. USDA’s stocks forecast fell 40 million bushels to 755 million.
USDA raised wheat production, feed and residual, and exports. Ending stocks still are forecast to remain hefty at 1,014 million bushels.
What It Means for the U.S. Farmer: The outlook for corn currently is bearish with acreage coming in larger than expected and generally stabilizing conditions for the crop. Weather still can have an impact on production, but it is FBN’s opinion that absent adverse weather conditions forward, corn supplies are looking to be hefty, keeping pressure on the market. FBN believes the soybean balance sheet is less bearish, but given the lack of commitments to China and no sign of a near agreement, exports are expected to remain below pre-war totals. USDA cut 100 million bushels off of new-crop exports. FBN believes that wheat futures have upside potential, but that futures will have to break away from corn with strength in wheat expected into the 2020 calendar year.
No Significant Change to U.S. Corn, Soybean Conditions
Corn conditions were rated 57% good to excellent, unchanged from the previous week.
Silking advanced 12 percentage points to 90% and now is 7 points behind the average.
Dentings were reported at 7%, compared with the average at 16%. The crop has made up ground, narrowing the gap between actual and average development as the growing season progresses.
Soybeans were rated at 54% good to excellent, the combined total being unchanged, week over week.
54% of the crop was setting pods, 22 percentage points behind the average.
Spring wheat condition declined, and 8% of the crop has been cut.
Cotton condition improved with Texas showing a boost in ratings.
20% of the crop is opening bolls with Texas at 31%, which is above average.
What It Means for the U.S. Farmer: At FBN, we believe the cooler-than-normal temperatures and recent rains have overall been beneficiary to the corn crop and helped stabilize yields, which is reflective in the condition ratings. While yields are forecast to come in below trend, the higher acreage and latest yield forecast point to hefty supplies for the corn crop. FBN has smaller yield forecasts for both corn and soybeans compared with USDA.
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