March 29, 2024

USDA crop production estimates: Record corn and soybean yields

MINNEAPOLIS — Record corn and soybean yields projected in the U.S. Department of Agriculture’s crop production estimates Sept. 11 were in line with trade expectations, but lower production did move the prices upward in the initial market reaction.

Brian Hoops, Midwest Market Solutions president and senior market analyst, looked at the new numbers in a teleconference hosted by the Minneapolis Grain Exchange.

“Corn yield at 178.5 bushels per acre is an all-time best and eclipses the previous high of 176.6 bushels per acre in 2017 and 2018. It is down from last month’s report, but it is an all-time record,” Hoops said.

“The same thing for soybeans, it’s down from a month ago, but at 51.9 bushels per acre that is still the best soybean yield in history, tying 2016, 2017 when we had 51.9 bushels per acre. Of course, that is still subject to change, depending upon harvest data we’ll uncover as we go through the next several months. These numbers can go up and down based off of what is seen by the farmers. But what the USDA had to say today, still record corn and soybean yields.”

There were questions entering the release of the crop production and supply and demand estimates reports about the impact the wind storm had on corn. What did the reports tell us and how did it impact the balance sheet?

"USDA did lower Iowa harvested acres by 550,000, down to 13 million acres. Iowa yields were also lowered by 11 bushels per acre. So, combined, that means about 254.1 million bushels of production was lost due to the heavy winds that went through the number one corn producing state of Iowa. Even with that type of loss, we still have an abundant supply of product. So, USDA did give us a production size of 14.9 billion bushels including the losses in Iowa.

"USDA also made adjustments as far as lowering industrial usage, feed usage and ethanol usage. The only positive change for demand was a 100 million bushel increase in exports.

"So, despite the production losses of 378 million bushels in the U.S., ending stocks only dropped 253 million bushels. That was more than the trade guess and at 2.5 billion bushels, you’re looking at a carryout north of 17% stocks-to-use and that’s a real burdensome supply.

"This would be the largest carryout numbers that we have on our database as we go back for at least several years, and 2.26 billion was the largest since 2016-2017, but this 2.5 billion bushels would be the largest going back into the late-1980s timeframe.

"Overall this is not a bullish report for corn and I think producers that are seeing 45, 50 cents move compared to where we were a month ago will recognize that and start to pressure this corn market."

There were minimal changes made to the soybean balance sheet with the exception of production being lowered by 112 million bushels from last month.

"In Iowa where the wind damage was prevalent in the corn, USDA made very little changes as far as harvested soybean acres. The yield decreased slightly across Iowa by 4 bushels per acre and most of our major states did see production losses compared to last month. The only state where there was a production increase was Minnesota, up 1 bushel to 52 bushels per acre."

Were there any changes in U.S. soybean demand?

"Soybean demand was left unchanged and that has some in the trade scratching their heads why they wouldn’t increase exports when we are off to one of the best export starts in recent history. Corn exports were increased by 100 million bushels, but soybeans were left unchanged.

"Soybean exports are already forecast to jump by over 450 million bushels from last year and so of this has already been accounted for. But there are questions being asked right now about why there were no changes to the export profile.

"Overall, soybean ending stocks lowered to 460 million bushels in the U.S. That is a supportive number. It changes the balance sheet so when you’re talking about 460 million bushels we’re tightening things up and getting closer to the 10% to 11% stocks-to-use ratio.

"I think the big question going forward to traders will be if we do have some type of La Niña event in South America and production is curtailed there, China’s demand will come back to the United States and that will be bullish for prices."

With small grains and production estimates being released the of the month, USDA made not changes to the U.S. wheat balance sheets. Were there any other line items of note in the wheat picture?

"Ending stocks stayed at 925 million bushels. The only changes that occurred for wheat were on the world side. World ending wheat stocks for the old crop marketing year of 299.8 million tons is slightly below the average trade guess and very little change from last month.

"But on a world basis for the 2020-2021 marketing year USDA increased ending stocks by about 2.6 million tons. The trade was looking for virtually unchanged stocks, but the increase in the world stocks was considered to be bearish and that will limit any advance in the wheat market as this is going to be considered longer term bearish, especially when you have expectations for production increases in Russia, Australia and Canada this next year.

"That should be a warning sign to producers that rally attempts are going to be labored, especially any supply rallies need to be sold."