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BY DR. TODD D. DAVIS
Extension Grain Marketing Specialist
University of Kentucky
THE AUGUST World Agricultural Supply
and Demand Estimates ( WASDE) published
by USDA projected large corn, soybean,
and wheat crops. Large crops usually imply
increasing ending stocks, which reduces the
potential for higher prices.
However, each of these markets has a
story that could create a bullish market “if”
the right thing happens.
The 2018 corn crop is projected to be
slightly smaller than last year’s, assuming
a harvested area of 81. 8 million acres and a
national yield of 178.4 bushels per acre. The
U.S. has been gradually drawing down stocks,
and strong domestic demand is projected to
continue reducing corn stocks for another year.
The USDA projects 2018-19 marketing year corn stocks at 1.68 billion bushels,
which would be a reduction of 343 million
bushels from the previous year. Reduced corn
stocks would support higher prices, and the
USDA projects the U. S. farm price at $3.60 per
bushel ( Table 1).
Global demand for corn is increasing. “If”
global demand continues to increase, the U.S.
might export more corn than currently projected, and obtain even higher prices.
Similarly, the wheat market has been
reducing stocks due to record low seeded
area and average yields. The USDA projects
wheat exports to increase from last year,
which would help lower wheat stocks and
support higher prices. It currently projects
a U.S. wheat farm price of $5.10 per bushel.
Europe, Australia, and the Black Sea regions
are experiencing production problems. “If”
global production losses are significant
enough, the U.S. is positioned to increase
wheat exports further and receive even
The soybean market has received national
attention for its role in U.S. trade policy. China
is the world’s soybean customer, providing
the fuel propelling soybean market prices to
be competitive against corn or wheat. Trade
uncertainty has dramatically affected the
The USDA projects soybean production at
4. 6 billion bushels due to record harvested
area and the second largest yield on record.
It projects soybean use to be slightly lower
than the previous year. This triple-whammy of
a large crop, larger carry-in, and stagnant use
creates a scenario for soybean stocks to build
to the largest quantity on record.
The soybean stocks-to-use ratio is projected to be the largest since 2006, which
will weigh heavily on soybean prices. The
USDA projects a U.S. farm price of $8.90 per
bushel, which is $0.45 per bushel less than
the previous year.
The “if” for the soybean market involves
resolving the trade dispute with China.
China’s appetite for soybeans suggests that
they will buy from the U.S. before the South
American harvest next March. The questions
are when will China return to our market and
the quantity of soybeans they will buy.
The “ifs” for corn and wheat markets
involve strong world demand that should
benefit both markets and create the potential for higher prices. The “if” for the soybean
market is in the hands of politicians negotiating the trade agreements. Assuming that the
trade issues are resolved amicably, the U.S. will
be better positioned to be a consistent supplier
to help satisfy China’s growing demand for soybeans. A quick resolution to these trade disputes will be most helpful to soybean farmers.
Dissecting the ‘ifs’ of 2019 outlook
for corn and soybean markets
Sunbelt Ag Expo