USDA’s recent Agricultural Outlook Forum presented the first look at balance sheet projections for the 2020/2021 crop year. These supply and demand forecasts will be updated in the May World Agricultural Supply and Demand Estimates report and will also include acreage information from USDA’s March Prospective Plantings report, which will include surveyed farmers’ 2020 planting intentions.
Planted Acres Projections for 2020
For corn, soybeans and wheat, total planted acres are projected to be 224 million in 2020. Corn planted acres are projected to increase to 94 million acres, a 4.8% bump from 2019’s 89.7 million acres, which followed substantial prevent plant insurance claims. Soybean planted acres are forecast to increase to 85 million acres in 2020, significantly above the 76.1 million planted in 2019, which again was reduced due to historic precipitation and planting delays. Peak soybean acreage occurred in 2017, with 90.2 million acres of soybeans planted. 2020 wheat planted acres are estimated at 45 million, which is the lowest number on record since 1919. Since the 1996 farm bill decoupled farm program payments from production decisions, wheat planted area has fallen by nearly 30 million acres in favor of more profitable corn and soybean acreage.
Balance Sheet Estimates for 2020
Corn production is on track for a record year. In addition to increased acres from 2019 to 2020, corn yield is projected to be 178.5 bushels per acre, assuming normal planting progress and normal summer growing conditions. Yields in 2019 were 168 bushels per acre, significantly lower due to weather challenges throughout the year. Farmers will be looking to the export and ethanol markets to step up their purchases if the record corn crop comes to fruition. Current estimates show total demand increasing to 14.74 billion bushels. However, the demand increase does not fully offset the supply growth and ending stocks of corn are projected to be 2.6 billion bushels at the close of 2020, the highest since 1987. The higher ending stocks are projected to pressure corn prices lower in 2020 with a season average price of $3.60 per bushel – down 25 cents from the old crop.
2020 soybean production is estimated to be 4.2 billion bushels, up 18% from 2019, but down more than 200 million bushels from the 2017/18 and 2018/19 crop years. The national average soybean yield for 2020 is currently projected at 49.8 bushels per acre, up 5% from 2019. Soybean total use is projected to reach a record high 4.3 billion bushels, with exports currently projected to increase by 12%. Exports could move higher if China’s Phase 1 targets are realized. USDA estimates can only reflect current publicly available data, but in the coming months, the department is likely to include Phase 1 China purchases as confirmation of the purchases occurs. As a result of the demand improvement in soybeans, ending stocks are projected to fall to 320 million bushels and the season-average price is projected at $8.80 per bushel – up a nickel.
In addition to record low planted acres projected for wheat in 2020, wheat yields are also projected to be lower, at 48.2 bushels per acre. That’s a 7% decline from 2019 when yields were 51.7 bushels per acre. USDA forecasts total wheat production at 1.8 billion bushels for 2020, a 4.4% drop from 2019’s 1.9 billion bushels. Wheat use is in line with the current old crop utilization at 2.1 billion bushels – due in large part to continued strength in wheat exports and domestic use. Demand for wheat is expected to outpace supplies again in 2020, helping to draw down ending stocks to 777 million bushels – the lowest level since 2015. As a result of continued demand strength and falling inventory levels, season average what prices are projected at $4.90 per bushel, up 35 cents from the current marketing year average price.
Summary
The 2020 outlook reveals increased production for corn and soybeans and lower production for wheat in 2020. The increase in corn and soybean production is due to acreage and yield recovery following the adverse growing and harvesting conditions in 2019. With fewer acres and lower yield, wheat production is expected to decline. Strong demand for wheat and soybeans is expected to draw down supplies and may lead to higher prices in 2020. Meanwhile, ample supplies in the corn market are expected to lead to higher stocks and lower prices in 2020.
