The USDA Agricultural Outlook Forum is currently underway. The Office of the Chief Economist presented expected crop acres and other production metrics.
Upcoming Dates
February 21 – Cattle on Feed, NASS
Farm Bill Meeting – February 24 – Spearman, TX
Olton Ag Conference – February 26 – Olton, TX
Crops Conference – March 2 – Pampa, TX
Beginning Futures and Options Class – March 5 – Perryton, TX
DEADLINE APPROACHING
March 3 – High Plains Dairy Conference (Click here for details)
Outlook Forum
Each spring, USDA hosts the Agricultural Outlook Forum in Washington D.C. The forum serves as an opportunity for policymakers, allied industries, and stakeholders to discuss the outlook for commodity markets, trade, and farm income each year. Yesterday (2/20/2020) Dr. Robert Johansson, the Chief Economist, provided USDA’s 2020 agricultural outlook.
A primary takeaway from the the Outlook Forum is the expectation of planted acres for the upcoming year. The key takeaway this year seems to be that total expected planted acres for 2020 are up compared to 2019. These estimates are based entirely on supply, demand, and price expectations and assume normal weather, but the first official estimates won’t occur until the May WASDE, which reflects planting intentions. Markets for corn, soybeans, wheat, and cotton fell on the news. The big numbers that we were watching for in this area were the corn acreage and cotton acreage forecasts. Acres are an indicator of supply, and therefore help build our expectations for price. If acres go up, supply goes up, and vice versa.
Corn and Cotton Acreage
USDA forecast 94 million planted acres of for corn for 2020. If we assume average abandonment harvested acres will land in the neighborhood of 86.6 million acres. If we achieve national average yield in the neighborhood of 178 bu./harvested acre, total corn production for 2020 will total approximately 15.5 billion bushels. Based on preliminary use estimates, ending stocks would top out over 2 billion bushels, a very bearish signal for corn. CME DEC 2020 Corn fell almost 3 cents.
USDA forecast 12.5 million planted acres of cotton for 2020, a year-over-year decrease of 9% and, if realized, a 5-year low. If we achieve national average yield of 870 lb./harvested acre (the previous 3-year average) total cotton production would top 18 million 480-lb. bales. Cotton fell a quarter of a cent.
Price Expectations
In addition to acreage expectations, USDA provided a forecast of season average farm price. The price of wheat, cotton, and soybeans are all expected to rise relative to last year, while the prices of corn and rice are forecast to fall. Lower corn price is a function of the increased acres, and relatively stable to declining use in feed and fuel.
Chart Challenge
Last week the mystery chart was a true challenge. It had no connection with the material in the post. The unlabeled chart last week represented the price of %CBD Content/lb. averaged across Colorado, Kentucky, and Oregon offered prices from PanXchange. Hemp-derived CBD has been the market driver in much of the hemp acreage growth over the last year. Data is sparse, and this chart is not intended to serve as the final word on price or price projections. You can find more on the cost of hemp production in an earlier post here.
This week’s mystery chart is a difficult one.
