USDA’s Nov. 10 Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports showed declines in corn and soybean production, yields, and ending stocks, prompting a jump in corn and soybean prices that fueled bullish sentiments for spring fertilizer demand.
Corn planted area was lowered to 91 million acres, down 1 percent from the previous estimate, but still up 1 percent from last year’s acreage. Corn yields are now projected at an average 178.4 bushels/acres, down 0.1 bushels from the previous forecast, but up 10.9 bushels from 2019. Corn area harvested for grain is projected at 82.5 million acres, down 1 percent from the previous forecast, with total corn production estimated at 14.507 billion bushels, up 8 percent from last year, but down 215 million bushels from the previous forecast.
With corn exports projected to rise to record levels due to increased demand from China and Ukraine, the WASDE estimate for corn ending stocks for 2020/21 fell 465 million bushels, to 1.7 billion bushels. If realized, that ending stocks figure would be the lowest since 2013/14. USDA raided the average corn price 40 cents, to $4.00/bushel.
Soybean acreage estimates fell 1 percent, to 83.1 million planted acres and 82.3 harvested acres, with both figures reflecting increases of 9-10 percent from last year. Soybean yields are expected to average 51.9 bushels/acre, unchanged from the previous forecast but up 4.5 bushels from 2019, with total soybean production projected at 4.27 billion bushels, up 20 percent from 2019, but down 98 million acres from the previous forecast on lower yields.
With reduced production and exports to China expected to rise, soybean ending stocks are projected at 190 million bushels, down 100 million from last month and the lowest level in the past seven years, if realized. The U.S. season-average soybean price for 2020/21 is forecast at $10.40/bushel, up 60 cents.
The U.S. will end the current season with the smallest corn and soybean inventories in seven years, USDA said. Corn futures for March delivery surged to as high as $4.3425/bushel after the reports were released, the highest since July 24, 2019. Soybean futures for January delivery rose as much as 2.9 percent, to $11.43 1/4 a bushel, extending a rally to the highest since July 2016.
“The market reaction to today’s WASDE is all about expectations,” Stephen Nicholson, a senior grain and oilseed analyst at Rabobank, told Bloomberg. “The market wasn’t looking for the yield reductions in corn and soybeans.”
The bullish report boosted expectations for fertilizer demand next year, capping an already favorable outlook for fall application volumes. “The USDA announcement yesterday on corn and bean stocks has rocked this market, and everyone is very bullish on forward NPK values,” one producer source told Green Markets on Nov. 11.
USDA’s outlook for 2020/21 U.S. wheat this month is for stable supplies, higher domestic use, unchanged exports, and reduced ending stocks. Projected 2020/21 ending wheat stocks fell 6 million bushels, to 877 million, down 15 percent from last year. The season-average farm price for wheat was unchanged at $4.70/bushel.
All cotton production is forecast at 17.0 million 480-pound bales, down less than 1 percent from the previous forecast and down 14 percent from 2019. Cotton yields are expected to average 909 pounds/acre, down 1 pound from the previous forecast, but up 86 pounds from 2019. All cotton harvested area is forecast at 9.01 million acres, unchanged from the previous forecast, but down 22 percent from 2019.
The marketing-year average price received by upland cotton producers is forecast at 64.0 cents/pound, 5 percent above the October forecast and 7 percent higher than 2019/20’s price of 59.6 cents.