Each year, in May the Agriculture Department’s World Agricultural Supply and Demand Estimates report kicks off a discussion about the new crop supply and demand balance sheets. The report is based on farmers’ planting intentions and weather-adjusted trend yield models. Given the uncertainty around planting in both the Northern and Southern hemispheres, the supply and demand projections are highly uncertain. As a result, the industry focuses most heavily on projections for ending stock levels.
For the 2018/19 marketing year – the crop currently being planted – USDA projects corn ending stocks at 1.682 billion bushels, in line with trade estimates and down 23 percent from the 2017/18 ending stocks projection. If realized, the 2018/19 ending stocks level would be the lowest stock level in five years. Based on projections for lower ending stocks, U.S. 2018/19 marketing year average corn prices are projected to increase nearly 12 percent, or 40 cents per bushel, to $3.80.
For soybeans, USDA projects ending stocks in 2018/19 at 415 million bushels, well below the average trade guess of 535 million bushels and down 22 percent from the 2017/18 ending stocks projection. While lower year-over-year, if realized, 2018/19 soybean ending stocks would be the second-highest level on hand since the 2006/07 marketing year’s 574 million bushels. Given the projections for lower stock levels, the 2018/19 marketing year average price for soybeans was projected at $10 per bushel, up 65 cents, or 7 percent, from 2017/18.
Read more at AFBF’s Market Intel Minute