USDA Forecasts Some Optimism for 2020, Analyst Says Not Necessarily

Looking Ahead to 2020 111519

USDA is already giving out its Agricultural Projections forecast for 2020. Some analysts don’t exactly agree with the forecast.

Tyne Morgan, host of U.S. Farm Report asked, “Do things look better next year?”

Brian Splitt of AgMarket.net replied, “No, they don’t.”

Splitt says that for a number of reasons. First, he says USDA assumes trend-line yield will increase every year. Splitt says USDA also plugs in how demand increases every year as well.

He says what alarms him is the projections show a trend-line yield which isn’t always what will happen.

“They are also using a demand number that’s 730 million bushels more than what is on the balance sheet this year,” said Splitt. “The feed residual number is over 400 million bushels higher. Exports are 200 million. Ethanol is higher [in USDA’s projections]. I think a producer needs to have a proactive mindset towards next year and put themselves ahead of the curve.”

Splitt anticipates some things to get better.

“We did see some things improve,” said Splitt. “I think the corn exports right now are right at about where they started for 2013-2014 in this particular marketing year.”

Splitt said,” If we do have a lower quality crop this year, the ethanol efficiency rates will decline. We will be using more corn for ethanol to get the same output. I think our feed residual number is probably 300 million bushels too low. “

He says it may take a bit for everything to be worked in the market.

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