Aided by the Sino-U.S. trade war, the U.S. soybean inventory doubled to a record 913 million bushels in one year, the government said on Thursday. At the same time, the USDA estimated that total will be cut in half by next September. The USDA also reduced its forecasts of the corn and soybean harvests for the third month in a row as weather damage to the crops became clearer.
This year’s planting of corn and soybeans, the two most widely grown crops in America, was delayed by the rainiest spring in a quarter-century. Snow and a killing frost in the western Corn Belt over the next few days could reduce yields for the crops, which are maturing later than usual. Corn and soybeans account for more than half of the 309 million acres (483,000 square miles) planted to the two dozen “principal” U.S. field crops, from wheat and rice to canola, sugarbeets, and potatoes.
The soybean stockpile, 438 million bushels in fall 2018, swelled to a record 913 million bushels this fall, the result of a string of bumper harvests and the trade war, which strangled sales to China, the No. 1 soybean customer. But stocks will drop to 460 million bushels by the time the 2020 crop is ready for harvest, predicted the USDA in its monthly WASDE report.
Soybeans staged a similar disappearing act a decade ago. The Sept. 1 “carryover” from one marketing year to the next grew for three years in a row, hitting 574 million bushels in 2007. A year later, it was just 205 million bushels, depleted by a combination of a sharply smaller crop, increased exports, and strong domestic demand — the same conditions that the USDA expects in the year ahead.
This time, the USDA said exports will recover modestly from the loss of the Chinese market and that domestic demand will continue at record levels, helping to empty storage bins. At the same time, the smallest soybean harvest in six years, 3.55 billion bushels, will prevent a buildup of supplies. World soybean production will be the lowest in four years, due mainly to the smaller U.S. crop. This year’s soybeans will sell for an average of $9 a bushel at the U.S. farm gate, 50 cents more than the 2018 crop, said the USDA.
All the same, the soybean stockpile would be unusually large — the 460 million bushels at the end of the 2019/20 marketing year would be the third-largest supply ever.
The USDA forecast a corn crop of 13.8 billion bushels, the smallest crop in four years and marginally smaller than forecast in September. Slightly less land is being harvested, though yields per acre are a bit higher. The USDA said 5.4 billion bushels of corn will be used to make ethanol in the year ahead. It would be the fourth year in a row of flat demand for ethanol.
Crop forecasts are based on conditions at the start of each month and assume normal weather for the rest of the year. If wintry weather develops in the western Corn Belt as forecast for this weekend, the impact would be incorporated into the November reports.
For the WASDE report, click here.
The Crop Production report is available here.