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December Corn/Soybean Estimates

December 25, 2018

Announcer: Farm and Family is a production of the Mississippi State University Extension Service.

Amy Myers: Today we're talking about December corn and soy bean estimates. Hello, I'm Amy Myers and welcome to Farm and Family. Today we're speaking with Dr. Josh Maples, Mississippi State University Extension Economist. Dr. Maples, this is based on the December World Agriculture Supply and Demand Report and the implications for corn and soy bean markets. Were there any surprises in this latest report?

Josh Maples: There really weren't any new surprises like the fireworks we've seen in some of the recent reports. Most of the numbers came in very close with the previous estimates. The December report left most estimates unchanged or only modestly adjusted from the November report.

Amy Myers: Let's look at a few crops specifically. What did the report tell us about soy beans?

Josh Maples: The latest report left most estimates modestly the same or unchanged from the November report. Soy bean production was at about 4.6 billion bushels. This was the same as in the last report. This will still be about 189 million bushels more, or an increase over last year's US production. The USDA soy bean ending stocks number remained at 955 million bushels. This will be more than double the ending stocks number from the 2017/2018 crop year.

Amy Myers: Despite the numbers in the report, there is still a lot of unknown on the demand side for soy beans, right?

Josh Maples: That's correct. Even though the estimates are more precise now that harvest is mostly behind us and we have a better feel for yields, the demand side of the story is still troubled by the trade disruptions, such as the concerns with China. There were some positive points that came out of the G20 Summit last week and that led to a little boost in prices, but we really have not yet closed the book on the soy bean tariff market impact yet.

Amy Myers: How about corn production and use?

Josh Maples: US corn production was left unchanged from the November report but the ending stocks number was raised slightly. Estimated production is now pegged at 14.6 billion bushels in the US. This will be about 20 million bushels more than we had last year. That ending stocks number was raised about 50 million bushels and that was due to lower export expectations. We're still looking at lower ending stocks this year than we saw a year ago for corn.

Amy Myers: Did the strong yield affect these numbers any?

Josh Maples: Yes, they did. Average soy bean yield in the US is pegged at 52.1 bushels per acre. This is up almost three bushels per acre over last year. Corn average yield is 178.9 bushels per acre and this is up over two bushels from last year so these stronger yield numbers are a primary driver in the larger production numbers.

Amy Myers: How do these large supplies of corn and soy beans affect prices?

Josh Maples: There are a lot of corn and soy beans both, which is going to continue to put some downward pressure on prices. The large supplies is a bigger issue with soy beans because of the large ending stocks number. I think supplies are a big story that's not getting quite as much attention as the demand side with the trade issues.

Don't get me wrong, the trade concerns with China are significant and are definitely impacting prices, but it's really the combination of those concerns with the large expected supplies that is leading to the lower soy bean prices we are seeing.

Amy Myers: With the lower soy bean prices, are soy bean acres going to transition to corn or cotton next year?

Josh Maples: It's certainly a possibility and, if the decision had to be made today based on current prices, then I would say definitely so, but we still have a long way to go before planting decisions have to be made, even though that date's getting closer every day. And a lot can change between now and then, so primarily, if we were to work out a trade deal with China, that could improve the soy bean market significantly, very quickly. 2018 was the first year since 1983 that US producers planted more soy beans than corn, but the current conditions suggest 2019 will swap back to corn. And for Mississippi producers, cotton is likely to be an attractive choice when compared to the margins for both soy beans and corn.

Amy Myers: Okay, thank you so much. Today we've been speaking with Extension Economist, Josh Maples with Mississippi State University. I'm Amy Myers and this has been Farm and Family. Have a great day.

Announcer: Farm and Family is a production of the Mississippi State University Extension Service.

Department: Agricultural Economics

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