The United States Department of Agriculture’s report for the month of May always creates greater tension for being the first release of the supply and demand of the following crop or following business year. USDA confirmed the trend of record crop and suggested a strong rebound in demand. This was a neutralizing factor for greater pressure on prices, despite the fact that final stocks are likely to be record-breaking in the next business year.
The month of May is always very turbulent due to the beginning of U.S. planting, climate variables that affect this moment, and first official figures for the new season. In 2019, we must remember, planting was strongly affected by constant rains and impediment to work on crops in the Midwest, causing the loss of almost 10 million acres, reduced in the numbers of the soybean planted area. However, it was corn that showed the biggest price high, from USD 3.50 to 4.80 a bushel in just thirty days.
This is the second piece of data of this 2020 crop. The first was the projection of a planting of 97 million acres, the second largest area in history. Moreover, the planting started very fast, with 67% complete of the cultivated area, against average 56%. Usually, when planting starts early, yield potentials tend to be high. The USDA’s May report brought this high area together with this early planting rate and projected a high yield of 178 bushels/acre, a record average. Unlike soybeans, whose productivity was projected below average, the USDA’s optimism about the corn crop brought a record production potential of 406 million tons for this year.