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Projected 2020 Corn Planted Acreage Is At 94 Million Acres
DR. AARON SMITH
KNOXVILLE, TENN.
At the USDA’s annual Agricultural Outlook Forum, the USDA released its national projections for the 2020 crop year.
For corn, planted acreage is projected at 94 million acres, up 4.3 million compared to 2019. The USDA projects yield at 178.5 bu/acre, up 10.5 bu/acre, an all-time record if realized. Production is projected at 15.46 billion bushels, up 1.768 billion bushels year-over-year. Ending stocks are projected at 2.637 billion bushels, up 745 million bushels.
For soybeans, planted acreage is projected at 85 million acres, up 8.9 million compared to 2019. The dramatic increase in planted acreage represents a return to “normal” prevented planted acres for both corn and soybeans. We will need to wait and see what weather brings for the 2020 planting season. Soybean yield is projected up 2.4 bu/acre, at 49.8 bu/acre. Production is projected at 4.195 billion bushels, up 637 million year-over-year. Ending stocks are projected at 320 million bushels, down 105 million bushels.
For wheat, planted acreage is projected at 45 million acres planted, down 0.2 million compared to 2019. Production is projected at 1.836 billion bushels, down 84 million bushels, due in large part to a 3.5 bu/acre decrease in yield compared to 2019. Ending stocks are projected down 163 million bushels compared to 2019, at 777 million bushels.
For cotton, planted acreage is projected at 12.5 million acres, down 1.24 million compared to 2019. The USDA projects yield at 855 lb/acre, up 38 lb/acre. Production is projected at 19.5 million bales, down 0.6 million bales year-over-year. Ending stocks are projected at 5.3 million bales, down 0.1 million bales.
Compared to the 2019/20 marketing year, 2020/21 marketing year exports are projected: unchanged for wheat at 1 billion bushels; up 375 million bushels for corn at 2.1 billion; up 225 million bushels for soybeans at 2.05 billion; and unchanged for cotton at 16.5 million bales.
The two main takeaways from the USDA projections were the dramatic increase in corn ending stocks and the modest increases in exports for the upcoming marketing year. All futures prices were down for the day.
Projected crop insurance prices (as at February 21): corn - $3.92; soybeans - $9.20; and cotton - $0.69. One week remaining before projected prices for crop insurance are set.
Corn
Ethanol production for the week ending February 14 was 1.040 million barrels per day, up 7,000 barrels from the previous week. Ethanol stocks were 24.781 million barrels, up 0.423 million barrels compare to last week. Corn net sales reported by exporters for February 7-13 were up compared to last week with net sales of 49.2 million bushels for the 2019/20 marketing year and 0.04 mil-lion bushels for the 2020/21 marketing year. Exports for the same time period were down 3 percent from last week at 30 million bushels. Corn export sales and commitments were 57 percent of the USDA estimated total exports for the 2019/20 marketing year (September 1 to August 31) compared to the previous 5-year average of 70 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Over-all, basis for the week ranged from 6 over to 26 over, with an average of 18 over the March futures at elevators and barge points. March 2020 corn futures closed at $3.77, unchanged since last Friday. For the week, March 2020 corn futures traded between $3.76 and $3.83. Mar/May and Mar/Dec future spreads were 3 and 9 cents. May 2020 corn futures closed at $3.80, down 2 cents since last Friday.
In Tennessee, new crop cash corn contracts ranged from $3.85 to $4.09. December 2020 corn futures closed at $3.86, down 2 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2020 Put Option costing 26 cents establishing a $3.64 futures floor.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 18.2 million bushels for the 2019/20 marketing year and 0.1 million bushels for the 2020/21 marketing year. Exports for the same period were up 57 percent compared to last week at 35.2 million bushels. Soybean export sales and commitments were 67 percent of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 85 percent. Average soybean basis strengthened at Memphis, Northwest Barge Points, and Northwest Tennessee and weakened at Upper-middle Tennessee. Basis ranged from 19 under to 30 over the March futures contract at elevators and barge points. Average basis at the end of the week was 16 over the March futures contract. March 2020 soybean futures closed at $8.90, down 3 cents since last Friday. For the week, March 2020 soybean futures traded between $8.85 and $9.02. Mar/May and Mar/Nov future spreads were 9 and 27 cents. May 2020 soybean futures closed at $8.99, down 4 cents since last Friday. March soybean-to-corn price ratio was 2.36 at the end of the week.
In Tennessee, new crop soybean cash contracts ranged from $9.04 to $9.33. Nov/Dec 2020 soybean-to-corn price ratio was 2.38 at the end of the week. November 2020 soybean futures closed at $9.17, down 5 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 November 2020 Put Option which would cost 43 cents and set an $8.77 futures floor.
Cotton
Net sales reported by exporters were down compared to last week with net sales of 235,300 bales for the 2019/20 marketing year and 141,200 bales for the 2020/21 marketing year. Exports for the same time period were down 6 percent compared to last week at 375,700 bales. Upland cotton export sales were 88 percent of the USDA estimated total annual exports for the 2019/20 marketing year (August 1 to July 31), compared to the previous 5-year average of 84 percent. Delta upland cotton spot price quotes for February 20 were 65.62 cents/lb (41-4-34) and 67.87 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.21 cents to 59.03 cents. March 2020 cotton futures closed at 68.93 cents, up 1.52 cents since last Friday. For the week, March 2020 cotton futures traded between 67.73 and 69.03 cents. Mar/May and Mar/Dec cotton futures spreads were 0.07 cents and 0.72 cents. May 2020 cotton futures closed at 69 cents, up 0.59 cents since last Friday.
December 2020 cotton futures closed at 69.65, up 0.59 cents since last Friday. Downside price protection could be obtained by purchasing a 70 cent December 2020 Put Option costing 3.91 cents establishing a 66.09 cent futures floor.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 12.7 million bushels for the 2019/20 marketing year and 2.2 million bushels for the 2020/21 marketing year. Exports for the same time period were up 18 percent from last week at 21.9 million bushels. Wheat export sales were 82 percent of the USDA estimated total annual exports for the 2019/20 marketing year (June 1 to May 31), compared to the previous 5-year average of 92 percent. March 2020 wheat futures closed at $5.51, up 9 cents since last Friday. March 2020 wheat futures traded between $5.48 and $5.70 this week. March wheat-to-corn price ratio was 1.46. Mar/May and Mar/Jul future spreads were 1 and 1 cent. May 2020 wheat futures closed at $5.52, up 11 cents since last Friday. May wheat-to-corn price ratio was 1.45.
In Tennessee, June/July 2020 cash contracts ranged from $5.61 to $6.01. July 2020 wheat futures closed at $5.52, up 11 cents since last Friday. Downside price protection could be obtained by purchasing a $5.60 July 2020 Put Option costing 32 cents establishing a $5.28 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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