By Doug Tenney, Leist Mercantile
Grains the first half of May were all lower with corn down 1 cent, soybeans down 17 cents, and wheat down 24 cents compared to the end of April. It should be no surprise that the bearish pattern seen at the end of April continues. Shrinking demand is taking place all around us in many areas of agriculture, particularly the grains. It was the theme seen with the May 12 WASDE Report.
For example, corn for ethanol in marketing year 2019-2020 was cut 100 million bushels. That decline was surprisingly low as many had expected a much more drastic cut. At that time many suggested the corn for ethanol number could be cut an additional 350-450 million bushels in coming months. Looking back only one month, USDA had cut the ethanol number 375 million bushels in April. When you review the weekly corn grind, the decline is sharply affected by the huge number of U.S. citizens not driving to work due to the coronavirus. Weekly ethanol grinds in January and February were 103 million to 108 million bushels of corn. It reached the low for the year at just 53 million bushels used mid-April. The following two weeks had a minor rebound up to 63 million bushels.
The weekly Crop Progress Report of May 11 had U.S. corn planting at 67% and soybeans at 38% which was far above planting progress at the same time a year ago when the U.S. corn planted was just 28% and U.S. soybeans planted was at 8%. Ohio at this writing had corn planting progress all over the spectrum. Some producers, mostly in northwest Ohio are done planting corn, which is exciting for them as many in that Ohio region had zero corn acres in 2019 due to an unceasingly wet spring. Currently, the majority of Ohio producers are in early planting stages. Midwest weather forecasts the last half of May called for normal to above normal temperatures with normal to below normal rainfall.
For at least the next three months you will continue to hear numerous price projections for December CBOT corn and November CBOT soybeans will land during the fall harvest. Already some are suggesting December corn will reach $2.60 and November soybeans $7.50. Both the supply and demand picture for corn continues to be mind-boggling. Beginning corn stocks for the 2020-21 marketing year seem certain to increase as demand for ethanol shrinks further in the 2019-20 corn marketing year.
Corn acres in 2020 will be 2 million to 3 million acres less than the 97 million acres projected with the USDA March 31 Planting Intentions Report as some corn acres get switched to soybeans. In the first supply and demand table for 2020-21 with last month’s WASDE report, USDA projected the U.S. corn yield at 178.5 bushels per acre. That yield is slightly above the trend line yield. It should be no surprise USDA is using a high yield for 2020 with the fast start to U.S. corn planting progress. Some are already projecting the U.S. corn 2020 production could reach a record 16 billion bushels.
In 2020-21, U.S. corn stocks are the highest they have been in at least 30 years. Last month USDA projected 2020-21 corn ending stocks at 3.3 billion bushels. Corn demand declines in coming months could push that ending stocks number to 4 billion bushels plus.