Focus On Ag (3-18-19)

FOCUS ON AG
Written by Kent Thiesse

Farm Management Analyst and Vice President, MinnStar Bank
March 18, 2019
USDA AG OUTLOOK FORUM PROVIDES SOME INSIGHT FOR 2019

The annual USDA “Ag Outlook Forum” was held in Washington, DC in late February. This Forum is usually
the first USDA projection for expected crop acreage for the coming growing season, as well as other current
economic conditions in the agriculture industry. The latest Ag Outlook Forum projected an increase in U.S. corn
acreage for 2019 and a decrease in soybean acreage, as compared to 2018 levels. The Forum also forecasted the
continuation modest price levels for grains and livestock for the coming year.
Following are the USDA projections from the Ag Outlook Forum for 2019 U.S. crop acreage, yields,
production, usage, and grain prices for the major U.S. crops ……
 Total --- U.S. acreage planted to the three major crops in 2019, which are corn, soybeans, and wheat, is
estimated at 224 million acres, which is a decrease of 2.1 acres compared to 2018 and is at the lowest
level in the past 8 years (2012-2019).
 Corn --- U.S. corn acreage is estimated at 92 million acres for 2019, which is an increase from 89.1
million acres in 2018, but is still below the 94 million planted acres in 2016. USDA is projecting a trend
line corn yield of 176 bushels per acre in 2019, which would result in an estimated total U.S. corn
production of nearly 14.9 billion bushels. The U.S. average corn yield has exceeded the expected trend
line yield frequently in recent years. Total corn usage for 2019-20 is estimated at just over 15 billion
bushels, which includes approximately 5.5 billion bushels for both livestock feed and ethanol
production, as well as over 2.4 billion bushels in exports.
USDA estimates the 2019-20 corn ending stocks at 1.65 billion bushels, with a market-year average
(MYA) price of $3.65 per bushel. This compares to the current estimated 2018-19 corn ending stocks of
nearly 1.73 billion bushels, and a projected average MYA price of $3.60 per bushel. The 2017-18 ending
stocks were 2.14 billion bushels with a MYA price of $3.36 per bushel, and 2016-17 ending stocks were
nearly 2.3 billion bushels, with a $3.36 per bushel MYA price.
 Soybeans --- 2019 U.S. soybean acreage is expected to be 85 million acres, which is down 4.7 percent
from the 2018 soybean acreage of 89.5 million acres. USDA is estimating the 2019 trend line soybean
yield at 49.5 bushels per acre, which would be below the record U.S. soybean yield of 51.9 bushels per
acre in 2016, and the estimated 2018 average soybean yield of 51.6 bushels per acre. The estimated total
2019 U.S. soybean production would be nearly 4.2 billion bushels.
Total soybean usage for 2019-20 is estimated at 4.26 billion bushels, compared to an estimated usage of
near 4.1 billion bushels for 2018-19, and a usage of nearly 4.3 billion bushels in 2017-18. Soybean
export levels are projected to rebound to over 2 billion bushels in 2019-20, increasing from the export
estimates of 1.875 billion bushels for 2018-19. The recovery of the soybean export market will likely
hinge on reaching a new trade agreement with China that removes tariffs on U.S. soybeans imported into
China, as well as the level of soybean purchases that are made by China in the coming months.
USDA estimates the 2019-20 soybean ending stocks at 845 million bushels, with a MYA price of $8.80
per bushel. This compares to the estimated 2018-19 ending stocks of 910 million bushels, and a
projected MYA price of $8.60 per bushel. The 2017-18 ending stocks were 438 million bushels with a
MYA price of $9.33 per bushel, and 2016-17 ending stocks were 302 million bushels, with a $9.47 per
bushel MYA price.
 Wheat --- U.S. wheat acreage in 2019 is projected to be 47 million acres, which is just below the 47.8
million planted acres in 2018. USDA is estimating the 2018 U.S. wheat yield at 47.8 bushels per acre,
with a total production of 1.9 billion bushels. This compares to a wheat yield of 47.6 bushels per acre
and a similar total production level in 2018. USDA is projecting wheat ending stocks at 944 million
bushels, with an average MYA price of $5.20 per bushel for the 2019-20 marketing year. This compares
to wheat carryover levels of over 1 billion bushels in the three preceding years, with MYA prices of
$5.15 per bushel (est.) for 2018-19, $4.72 per bushel for 2017-18, and $3.89 per bushel for 2016-17.
Most grain market analysts have been predicting 2019 crop acreage totals similar to the USDA acreage
projections, so there has been very little reaction in the grain markets in recent weeks. The projected lower
levels of ending stocks for corn could offer some grain marketing opportunities in the coming months,
especially if there are some Spring planting delays or Summer weather issues. On the other hand, the soybean
market prices will likely remain under pressure during 2019, and could decline if we get favorable growing
conditions or if a new trade deal with China does not materialize. Besides the monthly USDA Supply and
Demand Reports, the next important USDA crop data will occur with the USDA “Planting Intentions Report”,
which will be released on March 31.
USDA Livestock Forecast for the coming year ……

USDA also releases livestock production and price estimates for coming year at the Ag Outlook Forum;
however, due to the Federal government shutdown this year, the January, 2019 estimates were not available.
Following is a summary of the livestock information that was shared at the recent conference ……
 Cattle --- Based on July 1, 2018 estimates, USDA is projecting total 2019 U.S. beef production to
increase by about 3 percent to 27.6 billion pounds. Export levels are expected to be over 3.2 billion
pounds in 2019, which would be an increase of 2 percent from 2018, which showed an 11 percent
increase in beef exports from 2017. USDA is estimating the 2019 fed cattle market price in a range of
$115 to $122 per hundredweight (cwt.), which is similar to the 2018 average price of $117 per cwt.
 Hogs --- Based on the December 1, 2018 “Quarterly Hogs and Pigs Report”, USDA estimated total
inventory of all U.S. hogs and pigs at 74.6 million head, which was the largest since 1943. The breeding
herd was estimated at 6.3 million head, which was the largest since 1998. Total U.S. pork production for
2019 is projected at the record level of 27.3 billion pounds, which would be 4 percent above the 2018
level. Although tariffs remain in place on pork being imported into China, Mexico and Canada, pork
exports in 2019 are still expected to increase by nearly 6 percent in 2019 to about 6.3 billion pounds.
USDA is estimating 2019 average hog market prices on a live weight basis in a range from $41 to $46
per cwt., which correlates to a carcass price of approximately $55 to $62 per cwt. The 2019 price
projections are below the average live hog prices of $46 per cwt. in 2018 and near $50 per cwt. in 2017.
 Dairy --- USDA is projecting total U.S. dairy production for 2019 to increase slightly from 2018 levels,
reaching a record level of 221 billion pounds, up from 218 billion pounds in 2018 and 215 billion
pounds in 2017. Dairy cow numbers are similar to a year earlier, but milk production per cow continues
to increase. The good news for dairy producers is that USDA is projecting 2019 milk prices to increase
slightly from a year earlier, with an estimated average price of $17.30 per cwt., compared to $16.40 per
cwt. in 2018. The bad news is that the projected average milk price will likely still be below breakeven
levels for many small to medium sized dairy operations; however, the new “Dairy Margin Coverage”
(DMC) program may help producers achieve breakeven levels in 2019.
******************************************************************************************
Note --- For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960);
E-mail --- kent.thiesse@minnstarbank.com) Web Site --- http://www.minnstarbank.com/

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FOCUS ON AG

Written by Kent Thiesse

USDA AG OUTLOOK FORUM PROVIDES SOME INSIGHT FOR 2019

USDA Livestock Forecast for the coming year ……

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