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Production Projections and Trade Adjustments

Chad Hart ( and Lee Schulz (

As the leaves change color and the temperatures fall, traders in agricultural markets concentrate on production and usage figures for crops and livestock. With the delays in crop planting and the uncertainty surrounding trade, USDA has had a more difficult time than usual estimating the supply and demand projections for the various agricultural markets. However, these estimates are under intense scrutiny as farmers enter the fields for harvest and trade representatives from China and the United States meet. Each month, USDA updates the supply and usage projections, and the October update sent mixed signals through the markets.

For the livestock markets, the general storyline is for increasing production over the next 15 months. Comparing the 2019 and 2020 meat production numbers, USDA is showing growth in all of the major meat sectors (beef, pork, broiler, and turkey). Pork is projected to see the largest increase, in part to fulfill trade expectations from the impacts of African Swine Fever in China and other southeast Asian countries. USDA expects beef and broilers to make modest gains and livestock prices to increase in general; however, cattle are the exception—price projections are flat.

As USDA has updated these numbers this month, they held beef production steady and increased pork production for next year and broiler production for this year and next, but pulled back on turkey production in both years, as shown in table 1. Those production shifts impacted expected prices, with small declines in the broiler and pork projected prices. In summary, the livestock production and price outlook points to 2020 being a slightly better year for the industry. Production remains at an all-time high, while prices mostly improve. The biggest challenge to this outlook will come from export demand—for prices to hold up under the pressure of record production, export demand must be strong. However, recent export data has revealed some cracks in international demand. For pork, overall export sales for 2019 are running 17% ahead of last year’s pace; however, this is almost completely due to China. Purchases from our traditionally largest customers, including Mexico, our top pork export market, have declined by over 10% this year. For beef, overall export sales are down roughly 4% this year. The specter of export sale cancelations has also struck—early this month we saw a large sale previously marked for Hong Kong removed from the books. So, while there are challenges ahead for the livestock industry, there is a sense of muted optimism.

Table 1. USDA Livestock Projections
Item 2019 2020
Forecast Change from
September 12
Forecast Change from
September 12
Change from 2019
Production (billion pounds)
  Total Meat104.770.16107.420.642.65
Prices (dollars per cwt)
Prices (cents per pound)

That general sentiment holds for the crop side as well. USDA’s crop price projections show slight improvement in farm financial conditions, but a slide in crop production is a partial driver of that price growth. Expectations are for the 2019 corn crop to be 640 million bushels smaller than the 2018 crop, despite more corn area this year. Projections show a decline in corn usage, a 318 million bushel reduction for feed and residual corn, and a 165 million bushel decline in exports. However, with supplies falling faster than usage, corn-stock-level projections show a continued decline and a projection for season-average price to climb to $3.80 per bushel. Similar to livestock, the major concern will be in exports. Early export sales are running 50% below last year’s pace. The combination of strong global corn supplies, a bounty of other feed grains, the various trade disputes, and the relative strength of the US dollar implies export sales recovery will be hard to come by. Another segment to watch will be ethanol. With the announcement of a Renewable Fuels Standard deal on small refinery waivers, corn farmers are hoping for a rebound in corn use for ethanol. As table 2 shows, corn consumption via ethanol peaked in 2017. Weak processing margins in ethanol and the RFS waivers drove the pullback in corn usage in 2018. The USDA projections show corn usage for ethanol stabilizing for 2019.

Table 2. Corn Supply and Use
2015 2016 2017 2018 2019
Area Planted(mil. acres)
Production(mil. bu.)13,60215,14814,60914,42013,779
Beg. Stocks(mil. bu.)1,7311,7372,2932,1402,114
Imports(mil. bu.)6757362850
Total Supply(mil. bu.)15,40116,94216,93916,58815,944
Feed & Residual(mil. bu.)5,1205,4705,3045,6185,300
Ethanol(mil. bu.)5,2245,4325,6055,3765,400
Food, Seed, & Other(mil. bu.)1,4221,4531,4511,4251,415
Exports(mil. bu.)1,8982,2942,4382,0651,900
Total Use(mil. bu.)13,66414,64914,79914,47414,015
Ending Stocks(mil. bu.)1,7372,2932,1402,1141,929
Season-Average Price($/bu.)3.613.363.363.613.80
Table 3. Soybean Supply and Use
2015 2016 2017 2018 2019
Area Planted(mil. acres)82.783.490.289.276.5
Production(mil. bu.)3,9264,2964,4124,4283,550
Beg. Stocks(mil. bu.)191197302438913
Imports(mil. bu.)2422221420
Total Supply(mil. bu.)4,1404,5154,7354,8804,483
Crush(mil. bu.)1,8861,9012,0552,0922,120
Seed & Residual(mil. bu.)122146113138128
Exports(mil. bu.)1,9362,1662,1291,7481,775
Total Use(mil. bu.)3,9444,2144,2973,9674,023
Ending Stocks(mil. bu.)197302438913460
Season-Average Price($/bu.)8.959.479.338.489.00

Meanwhile, projections show soybean prices rebounding, as the planting problems this year will likely be a bigger market mover than the Chinese trade dispute. With 14% fewer soybean acres and nearly a five-bushel drop in national yields, soybean production is set to plummet to its lowest level in several years, with estimates nearly 900 million bushels below last year. While carryover stocks from last year’s crop were quite high, total soybean supplies this year will be smaller for the first time in seven years. The need for soybean meal in livestock rations are highly supportive of domestic usage, which continues to build. However, as with the other commodities, the challenge will be in exports. USDA projects a slight increase in soybean exports. However, export sales do not show that expected boost. Currently, soybean export sales are down 20%, even after accounting for recent sales to China. In fact, China is one of the few markets where soybean export sales are up. Last year was all about the damage from the losses in the Chinese market. This year may be all about the damage from market losses outside of China.

Given an agricultural economy that has been in the doldrums for the past few years, these projections do not provide a great deal of relief. Financial concerns will still overhang rural communities, and the likelihood of improvement hinges on a more stable trade picture. Next month USDA will update all of these projections. In that update, we will continue to look not for the calm after the storm, but some signs that the storm clouds are moving away.