The U.S. Department of Agriculture/National Agriculture Statistics Service (NASS) released their August crop production report this week, and commodity markets had some sharp reactions.
Corn production was forecast to be 13.9 billion bushels, down 4% from 2018, but higher than many were expecting. Acres planted were pegged at 90 million, and acres harvested for grain were pegged at 82 million acres, down 2% from the previous report. An expected yield of 169.5 bushels per acre offset the decrease in acres. Both numbers are higher than many private estimates, and FSA reported certified acres of only 85.8 million acres of corn planted, suggesting the harvested acres estimate may still be a bit high. Also suggesting a possible revision, USDA also says that 11.2 million acres were reported as prevented planted. If you add that with USDA’s planted acreage, it looks like US farmers intended to plant 101.2 million acres of corn this year, which seems unlikely. Adding to the negativity in the market, USDA announced on Friday they would provide RFS waivers to small refineries, hurting demand for ethanol. The market fell sharply on Monday and then gapped even lower on Tuesday’s open. December is now back in position to test support at the May low of $3.63 ¾.
Soybeans, on the other hand, saw a friendlier report, with NASS reporting planted acres of 76.7 million acres. That is down from 80 million in the previous report, and the trade was expecting to see a small increase. Total production is pegged at 3.68 billion bushels, with harvested acres pegged at 75.9 million and an expected yield of 48.5 bushels per acre. FSA reported certified acres of 74 million acres and prevented planted acres of 4.35 million acres. The market reaction here has been muted thanks to renewed concern about the trade war with China and stock market weakness. The market has given back the gains charted early in the week. November will have resistance at this week’s high of $8.96 ¾, and support at the recent low of $8.54 ½.
NASS has pegged harvested rice acres at 2.711 million, with Arkansas accounting for 1.276 million of that. However, FSA has reported certified acres of 2.487 million, 1.145 million of which is in Arkansas. Nationwide, prevented planted acres are reported to be 747,688, with Arkansas accounting for the majority of that at 510,491 acres. Average yield is expected to be down from 2018 for a national average of 7,577 pounds per acre and an Arkansas average of 7,450 pounds per acre. November futures tested the waters above $11.90 early in the week, but stock market weakness and an uninspiring export report made it impossible for the market to sustain the upward momentum. The recent low of $11.55 is the first level of support.
Cotton futures can’t catch a break. NASS has pegged production at 22.5 million bales, up 23% from 2018. Harvested acres are forecast at 12.6 million acres, and the national average yield is pegged at 855 pounds per acre. When the sharp increase in supply is coupled with news that China will no longer import any agriculture goods from the US due to the latest round of tariffs, you get futures that are trading at their lowest level in many years. December is struggling to overcome resistance at 60 cents.
Livestock futures have also taken a hit from the news that the trade war with China has escalated to the point that China says they will no longer import any agricultural products from the U.S. October hogs have stabilized since the announcement, but are chopping along mostly sideways between the contract low of $61.50 and resistance at $70. In addition to export concerns, the hog market is facing the prospect for large fourth quarter hog supplies. Wholesale pork values remain strong, however, providing some underlying strength.
Live cattle futures closed limit down the first two trading days of the week. Weakness was triggered by demand concerns after a devastating fire at the Tyson plant in Holcomb, Kansas. The market is now attempting to stabilize as Tyson has announced they will boost production at other plants to make up some of the lost capacity, and the plant may not be down as long as initially believed. Feeder cattle posted sharp losses following the live market. Boxed beef values have spiked in reaction to the decrease in slaughter capacity, but that strength has not yet had much impact on futures.