Oil Crops Outlook: Unsown Soybean Area Lowers Forecast of 2019/20 Production

Photo: Bruce Schultz, LSU AgCenter

New USDA survey data revised downward the estimate of sown soybean area for 2019/20 from the June Acreage report by 3.3 million acres to 76.7 million. Since the U.S. average soybean yield is unchanged at 48.5 bushels per acre, lower acreage is entirely responsible for reducing 2019/20 expected production this month by 165 million bushels to 3.68 billion.

USDA’s forecast of U.S. soybean exports for 2019/20 is lowered by 100 million bushels this month to 1.775 billion. Overall, the outlook for season-ending stocks is trimmed by 40 million bushels to 755 million.

Domestic Outlook

U.S. Soybean Crop Forecast Reduced by Lower Acreage

Following extensive planting delays last spring caused by excessive wetness, the National Agricultural Statistics Service resurveyed crop acreage last month to determine how much was actually completed by the end of July. The new data revised downward the estimate of sown soybean area for 2019/20 from the June Acreage report by 3.3 million acres to 76.7 million. This reflects a 14-percent decline from last year and an 8-year low.

The largest reductions were for South Dakota (900,000 acres) and Ohio (500,000 acres), although many other States contributed to the decline as well. According to preliminary Farm Service Agency data, area designated as prevented-planting for soybeans soared to a historic high of 4.4 million acres. By comparison, last year’s level totaled only 276,000 acres.

In the Midwest, last spring’s excessive rainfall has since waned. This summer, topsoil moisture has been trending drier, particularly for parts of the eastern Corn Belt region, where July temperatures were above average.

Conditions are better for the Mississippi Delta region, though, which received moisture in mid-July when remnants of Hurricane Barry moved northward from the Gulf. Currently, most of this year’s soybean crop is still doing well, but the percentage rated in good-to-excellent condition is the lowest since the 2012 drought.

Another potential hurdle for this year’s soybean crop is that its stage of development lags well behind normal. As of August 11, only 82 percent of the U.S. soybean crop had reached the flowering stage compared to the 5-year average of 93 percent. Likewise, pod development had started for 54 percent of the soybean crop versus the 5-year average of 76 percent, which is the slowest rate of pod formation since 2003.

A crucial reproductive period for soybeans still lies ahead, with September weather taking on even more importance than usual. Although the U.S. average yield is unchanged this month at 48.5 bushels per acre, anticipated yields for Illinois, Indiana, and Ohio are down sharply compared to last year.

Thus, a decline in harvested acreage (down 14 percent to 75.9 million acres) is entirely responsible for reducing expected production this month by 165 million bushels to 3.68 billion.

Foreign Markets Fade for U.S. Soybean Exports

USDA’s forecast of U.S. soybean exports for 2019/20 is lowered by 100 million bushels this month to 1.775 billion. A dimmer outlook for soybean imports by China is primarily responsible for the lower export prospects.

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A continuing breakdown in U.S. trade relations with China has led to minimal new-crop sales there. However, domestic soybean crush for 2019/20 is seen unchanged at 2.115 billion, so the reduction for total supplies is partly offset by the lower export forecast. Overall, the outlook for season-ending soybean stocks is receding by 40 million bushels to 755 million.

Despite a moderate shrinking of the soybean stocks surplus in 2019/20, its level would be surpassed only by this year’s glut. Soybean farm prices will stay under pressure at $8.40 per bushel compared to the 2018/19 average of $8.50. Coupled with smaller output, weak soybean prices could slash the expected farm value of the crop toward $31 billion versus $38.6 billion in 2018/19.

Supplies of Peanuts To Shrink but Expand for Cottonseed

The U.S. peanut crop for 2019/20 is now forecast at 5.3 billion pounds. This represents a 3-percent decline from the 2018/19 harvest, due entirely to lower sown acreage. In contrast, the national average peanut yield—at 4,008 pounds per acre—would rank second only to the 2012 record.

As of August 11, 67 percent of peanuts were rated in good-to-excellent condition compared to 73 percent a year ago. Crop development in most States is ahead of or on par with the usual schedule.

Modest demand gains, coupled with lower supplies, would reduce season-ending stocks to 2 billion pounds from 2.46 billion in 2018/19. Domestic consumption in food is forecast to grow 2 percent in 2019/20 to 3.16 billion pounds.

At 1.275 billion pounds, U.S. peanut exports for 2019/20 are seen edging up 4 percent. Between August 2018 and June 2019, peanut exports to China have plummeted 80 percent from a year earlier. Shipments to China fell sharply after its Government raised import tariffs on U.S. peanuts.

In addition, slowing economic growth in China over the last year has led to an 8-percent depreciation in its exchange rate against the U.S. dollar—now at an 11-year low. This makes all U.S. exports more expensive in China. Despite the lack of demand from China, the overall decline for U.S. peanut exports in 2018/19 (4 percent) may be more modest.

Low prices have facilitated an expansion of peanut shipments to other countries, including the EU, Mexico, and Canada.

U.S. cottonseed production in 2019/20 is forecast to increase to a 13-year high of 6.97 million short tons. Production gains are primarily related to a 24-percent rebound in harvested acreage for cotton to 12.6 million acres. Domestic use and exports of cottonseed will likely benefit from a surge in output.

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