2020 Cotton, Corn, and Soybean Outlook

The USDA recently presented their first projections for 2020/21 marketing year at the annual Agricultural Outlook Forum in Washington D.C. This post will summarize the U.S. highlights of the reports for cotton, corn, and soybeans. The projections assume normal weather conditions for spring planting and summer crop development. Full length reports can be found at https://www.usda.gov/oce/forum/2020/Outlooks.htm.

Cotton

The 2020 projection for cotton acreage is down 9% from last year to 12.5 million acres. The acreage decrease is mainly due to the relative price competition from competing crops. Abandonment is projected at 19 percent and results in the assumption of 11 million acres harvested. U.S. cotton yields are projected at 855 pounds per acre. 2020 U.S. cotton production is projected at 19.5 million bales, which is 3 percent below 2019. Exports are projected to remain the same as 2019 at 16.5 million bales. This reflects an easing of U.S.- China trade tensions and stability in the U.S. cotton export market. Ending stocks are projected to decrease slightly to 5.3 million bales. The slight reduction of ending stocks will support a small average farm price increase to $0.64 per pound.

Corn

                The 2020 projection for corn is a record level of production. Corn acreage is projected at 94 million acres. With an estimated yield of 178.5 bushels per acre, corn production is projected at 15.5 billion bushels in 2020. This is a 13 percent increase in production from last year. Total corn use is projected up at 14.74 billion bushels with exports rebounding to 2.1 billion bushels. Corn for feed and residual use is projected up 275 million bushels to 5.8 billion. The main drivers of increased feed use are continued growth in grain consuming animals and lower expected corn price. Corn used for ethanol is up only slightly at 5.45 billion bushels due to the projection of flat gasoline demand. 2020 corn ending stocks are projected at 2.7 billion bushels, which is up 745 million bushels from last year. The increase in ending stocks is expected to drive down the average farm price of corn to $3.60 per bushel.

Soybeans

                The 2020 outlook for soybeans is characterized by higher production, but also higher crush and exports that lower ending stocks. Acreage is expected to rebound in 2020 to 85 million acres. Assuming a projected yield of 49.8 bushels an acre, U.S. soybean production is projected at 4.2 billion bushels. Higher domestic use of soybean meal is projected to increase soybean crush to 2.1 billion bushels. Soybean exports are projected up 225 million bushels to 2.05 billion bushels. This reflects a recovery in U.S. market share and easing of trade tensions. Due to higher exports and crush, ending stocks are projected at 320 million bushels. This would be a 105 million bushel decrease in ending stocks from last year and 589 million bushel decrease in stocks from two years ago. Export pressure from South American production and exports will dampen any major price recovery from last year and average farm price is projected at $8.80 per bushel.

Closing Remarks

                The key takeaways from these projections are a record corn crop, increased soybean production, flat cotton production, and a better export environment for all commodities. Farm prices are not projected to see any major improvement from previous years. Cotton and soybeans are projected up slightly and corn is projected down 25 cents from last year.  It must be remembered that a main assumption of these projections is normal weather conditions. We saw last spring that weather can still drive the market up to a better price environment for a short period. It is important in the current low-price environment that producers have a marketing plan in place to take advantage of the short term market changes. The forecasts discussed here will be updated by the USDA in the May 12^th World Agricultural Supply and Demand Estimates (WASDE) report. The next major report to keep an eye on is the March 31^st NASS Prospective Plantings report.