“While the 2019 crop is smaller, it is not by any means small,” said Chad Hart, Iowa State University Extension and Outreach grain marketing specialist. “This crop is smaller, but don’t let that trick you because from 2015 to 2019 we’ve produced the five largest corn crops.”
While supplies have shrunk a bit, demand may be shrinking even faster, said Hart during the Tri-State Agricultural Lender’s Seminar.
“The USDA usage estimates for feed is 5.3 billion bushels and in May it was 5.4 billion bushels, ethanol is at 5.4 billion bushels and it was 5.5 billion bushels and the biggest drop is exports now at 1.9 billion bushels,” he said at the meeting sponsored by Iowa State University Extension and Outreach, University of Illinois Extension, University of Wisconsin-Extension and the University of Wisconsin-Platteville College of Agriculture.
However, six to seven months from now, Hart expects the feed and ethanol usage numbers to be larger.
“Weather will impact this crop not necessarily in the yield, but in the quality and result in lower test weights,” he said. “That means livestock producers have to feed more corn to get the same daily rate of gain, and ethanol is the same way — you get less ethanol yield with lower quality corn.”
The scenario for soybeans is similar; crop production is shrinking, but the concern is that demand won’t keep up.
“But it’s a little different because crush continues to build and grow and a lot of that is related to the livestock industry,” Hart said. “Exports really scare the marketplace now at a nearly 400 million bushel drop.”
Hart noted that the biggest troubles for corn yields are occurring in the Eastern Corn Belt.
“Illinois yields are estimated at 179 bushels per acre, Indiana 162 bushels per acre and Ohio 160 bushels per acre,” he said. “Ohio is probably the worst crop I’ve seen all year.”
The U.S. soybean crop has both a yield and quality problem, Hart said.
“The USDA has lowered the soybean yield estimates two bushels,” he said.
As the USDA estimates soybean yields during the growing season they focus on counting the pods and estimating the pod weight.
“As we move through time, we tend to find more pods, but they weigh less,” Hart said. “This year, we were late to plant, the plants were late to bloom and those late blooms create pods, but the late pods don’t fill well, so the grain weight is dropped.”
According to the six- to 10-day forecast, the Midwest is facing colder than normal temperatures for the end of October.
“And we continue to be wet, and I fear we’re setting ourselves to replay 2019 when I look to 2020,” Hart said.
“The planting problems for this year’s crop started with last year’s wet fall,” he said. “That continued during the wet spring, which created flooding, delays in planting and here we are going through it again.”
While the United States will have a lower corn crop this year, that is not necessarily true globally.
“The only reason global numbers are down is ours are down. All the other countries are producing about what they did last year,” Hart said. “And last year globally was a record crop, so the world has a lot of corn to work with.”
The world soybean story is very similar.
“For the first time, the U.S. is the No. 2 country for soybean production because Brazil passed us,” Hart said.
“Until we figure out the trade dispute with China, it is hard to see where the soybean market will gain traction because two years ago China represented 30% of the U.S. export market,” he said. “You don’t just replace that in one month or one year.”
However, China remains the No. 1 market for U.S. soybeans, followed by Mexico, European Union, Taiwan, Japan and Egypt.
“Overall, our soybean exports are down 13% compared to last year, which was down 20% compared to the year before,” Hart said. “We still haven’t figured out how to fill in the hole from China.”
The demand for protein throughout the world has resulted in fairly strong beef exports each year since 2014.
“We’ve had a little set back this year so we’re running just under record pace,” Hart said.
“Japan is our biggest market for beef and we’ve seen a little pull back and a lot of that is due to a trade deal we’re not in,” Hart said. “The Trans-Pacific Partnership opened up the Japanese market to Australia and New Zealand because they have lower tariff rates than we do.”
U.S. pork exports have increased each year from 2015 to 2019. Even with the trade war with China, Hart said, the Chinese market needs pork because of the problems with African swine fever.
Although 2019 has been a challenging year for U.S. producers, Hart said, they did have an opportunity to market profitable corn, when corn hit $4.70 on the board.
“We need to take advantage of the market when it gives us what it does,” he said. “The $4.70 price gave us a margin we hadn’t seen in five years, and I feel we’ll replay something like that in 2020, especially if the quality problems are there.”
A lot of farmers are going to store their corn crop at home this year, Hart said.
“This is the wrong crop to learn how to store grain because once this crop starts to have problems, those problems will spread quickly,” he said.
“Farmers are going to have to watch this crop in the bins like a hawk,” he said. “It doesn’t matter how high prices go if you’ve got a crop you can’t sell.”