USDA Agricultural Projections Show Decreased Soybean Acres

On Friday, the USDA’s Office of the Chief Economist (OCE) released selected tables prepared for the Department’s upcoming Agricultural Baseline Projections report.  In part, the tables demonstrated that, “USDA estimated 82.5 million acres of soybean plantings for the spring of 2019, down from 89.1 million acres this year.”

Background

Friday’s OCE update explained that, “USDA’s long-term agricultural projections are a departmental consensus on a long-run representative scenario for the agricultural sector for the next decade. The projections are based on specific assumptions about macroeconomic conditions, policy, weather, and international developments, with no domestic or external shocks to global agricultural markets. A complete report is issued every year in February.”

An overview of the 2018 long-term projections is available here, while additional background regarding the development of those projections can be found here.

Friday’s update added that, “The World Agricultural Outlook Board chairs an Interagency Agricultural Projections Committee that develops the projections,” which includes several other USDA agencies; however, “The Economic Research Service has the lead role in preparing the USDA long-term projections report.”

And a news update last week from USDA pointed out that, “The projections do not represent USDA forecasts, but rather reflect a conditional long-run scenario based upon specific assumptions about macroeconomic conditions, policy, weather, and international developments, with no domestic or external shocks to global agricultural markets. The Agricultural Act of 2014 is assumed to remain in effect through the projection period.”

The OCE also noted that, “The projections use as a starting point the short-term forecasts from the October 11, 2018 World Agricultural Supply and Demand Estimates report.”

Early-Release Tables from USDA Agricultural Projections to 2028

USDA provided an overview of total acreage for major field crops, and Conservation Reserve Program (CRP) assumptions in the following table.

In summary, the table shows:

• USDA estimated 82.5 million acres of soybean plantings for the spring of 2019, down from 89.1 million acres this year.
• USDA estimated 92.0 million acres of spring plantings for corn, up from 89.1 million this year.
• USDA also estimated 51.0 million acres of total wheat plantings, up from 47.8 million in 2018.

More specifically with respect to soybeans (table below), USDA showed a lower ending stocks number for 2019/20 (723) than for 2018/19 (885), as well as a slightly higher farm price $8.75 (2019/20) versus $8.60 (2018/19).

Soybean exports were relatively unchanged in 2019/20 (2,075) from 2018/19 (2,060).

The long-term projections for corn (table below) showed a reduction in ending stocks in 2019/20 (1,603) compared to 2018/19 (1,813), and an increase in the farm price from $3.50 (2018/19) to $3.90 (2019/20).

Corn exports were projected to be relatively stable.

Recall that Wall Street Journal writers Jesse Newman and Jacob Bunge reported last week that, “U.S. farmers in 2018 planted more soybeans than corn for the first time in more than three decades, betting on that demand [from China]. But Chinese tariffs on U.S. soybeans have hurt that bet: U.S. exporters have sold less soybeans to China, typically the largest foreign buyer of the crop, in the past seven weeks than in a single week last fall. Soybeans inspected for export from ports in the Pacific Northwest—a main U.S. originator of soybeans bound for China—recently stood 82% below their year-ago level. Prices for the oilseeds have dropped 11% this year.”

But the Journal writers pointed out that, “Many farmers and agricultural officials said final crop choices might not be made until just weeks or days before planting gets under way, partly because of uncertainty over tariffs. President Trump and his Chinese counterpart, Xi Jinping, are scheduled to meet at the Group of 20 leaders’ summit in Buenos Aires next month.”