USDA's 2018 Outlook and Huge Weather Pattern Change Coming - Wednesday, 29 November 2017

The USDA has forecast their expectations for 2018.  They are predicting producers will plant 91.0 million acres of corn in 2018, this is up slightly from 90.4 million acres this year.  The initial yield forecast for 2018 is currently set at 173.5 bushels per acre, this compares to the 2017 yield of 175.4 and 2016 yield of 174.6 bushels per acre. Using these yield and acreage estimates for 2018, total production would be close to 14.5 billion bushels and would bump ending stocks a little higher to 2.6 billion bushels. These are very early estimates and are likely to be adjusted with changes in weather outlooks and shifts in demand. The agency will announce their Agricultural Projections through 2027 in February of 2018.

Updated forecasts from this week are showing a higher probability of La Niña developing.  Dry conditions in Argentina are also pointing to the likelihood of a La Niña caused drought in that country so upcoming forecasts will be closely watched. Forecasts for Brazil will become more important as we move closer to the production of the second-crop corn in Brazil until then Argentina will be in the forefront.

Mexico has continued to purchase corn from the U.S. at elevated levels during this marketing year. They have also been buying more corn from Brazil in record amounts as well.  This has caused some uncertainty in the corn complex. It was believed earlier that Brazil would not export corn in these large volumes because producers were expected to plant less corn acres and exports would be limited to preserve their reserve levels.  Brazil’s export numbers would indicate production may not be down as much as previously forecasted.

 

USDA soybean forecasts for 2018 show a slight increase in acres to 91 million acres from 90.2 planted in 2017.  The outlook for soybean yields is starting at 48.4 bushels per acre for 2018, this compares to 49.5 bushels per acre in 2017 and 52.0 bushels per acre in 2016.  This would put the total production slightly above 4.36 billion bushels and would push ending stocks slightly lower from our currently levels of 425 million bushels down to 376 million due to an expected increase in both crush and export demand. The USDA will also include soybean’s in their February 2018 Agricultural Projections to 2027 report.

Current levels of soybean supplies are already burdensome and may continue to increase as final harvest data is calculated.  The current weather in South America is not causing much concern for soybeans at this point but it will be watched closely over the next several weeks. With large supply levels here in the U.S. current prices appear to already have some “risk-premium” figured in and any further price movement to the upside will likely take more proof of production issues in South America.

The final days of November will deliver very little precipitation and generally above-normal temps. The maps shown below are the 6 to 10 day outlooks that run from December 2nd through December 6th

Weather Trends 360 is forecasting a “huge pattern change on the horizon”.  WT 360 predicts a brutally cold pattern is setting up for the 2nd week of December. Euro models also show the cold pattern arriving during that same time and predict it will remain through early January.


 

Enjoy the warmth while we have it because a very strong cold front is expected to effect the western U.S. beginning December 3rd.  From there it will move easterly into the Western Rockies by December 4th, Midwest by the 6th and east coast by the 7th.  Weather Trends 360 explains, “This pattern looks to be a prolonged sustained cold pattern for the U.S. with a massive –AO weather pattern that shows Greenland blocking all the way through the North Pole in the Gulf of Alaska. Usually when you see a pattern like that the cold can stick around for many weeks so get ready if you live in the Central and Eastern U.S. Snow TBD, but this certainly dramatically increases the chances for snow storms.” Weather Trends 360 looks for a large snowstorm with 8+ inches expected in some areas.  The bottom right hand map shows where the snow is projected to fall.

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