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Shrinking Numbers (1/12/16)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbThe January USDA reports provide the final production estimates for last year’s crops and an update on current and projected crop usage. With today’s reports, USDA found a number of areas to shrink. Starting with corn, final planting area was established at 88 million acres, down 400,000 from previous estimates. The national corn yield estimate was reduced by nearly a bushel to 168.4 bushels per harvested acre. That combination reduced national corn production by 53 million bushels to 13.6 billion bushels. So last year’s corn crop is still the 3rd largest on record, but it is a little smaller than first measured. Corn demand was also reduced in the export and food, seed, and other industrial uses categories. Overall, demand was lowered by 60 million bushels, while supplies only slipped by 43 million. So corn ending stocks for the 2015/16 marketing year were raised by 17 million bushels to 1.8 billion. And the midpoint of the season-average price range was dropped to $3.60 per bushel, down 5 cents from the previous estimate.

For soybeans, in general is the same. Planted area was reduced by 500,000 acres to 82.7 million acres. The national soybean yield was set at 48 bushels per acre, down 0.3 bushels. Total soybean supplies fell 51 million bushels to 4.15 billion. Soybean exports were lowered 25 million bushels, while seed and residual use dropped 2 million. However, unlike corn, the drop in supplies exceeded the drop in demand. So soybean ending stocks for 2015/16 were lowered to 440 million. But USDA moved the midpoint of their season-average price range lowered to more closely match recent futures prices, with the current midpoint at $8.80 per bushel, down 10 cents.

Thinking forward to the 2016 planting season, one of the bigger items in today’s report was the winter wheat acreage. Cropland sown to winter wheat is not generally available for corn and soybean production (unless winterkill hits hard or the area has potential for double cropping). This fall’s wheat planting came in at 36.6 million acres, down 2.85 million from the previous year. So there will be more available for corn and soybean production this spring, especially in the Plains states.

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Big Crops Get Bigger (11/10/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbThe November update from USDA found bigger corn and soybean crops than previously estimated. The national corn yield was raised to 169.3 bushels per acre, which added roughly 100 million bushels to estimated production. State-level yield estimates were higher in the northern and western Corn Belt, but lower to the south and east. The Iowa corn yield was set at 189 bushels per acre, which would be a record. The national soybean yield was also increased significantly, to 48.3 bushels per acre, adding again nearly 100 million bushels to the national total. The yield increases were more uniform across the country for soybeans, but Iowa is again projected to see a record yield for soybeans as well.

The supply strength, however, was coupled with some demand weakness. For corn, export and ethanol demand was reduced by a combined 125 million bushels. While feed demand increased 25 million bushels, the growth was not enough to offset the losses. For soybeans, USDA raised both crush and export demand from previous estimates, but the export number remains well below last year’s level. Ending stocks grew for both crops. Corn ending stocks were projected at 1.76 billion bushels. Soybean ending stocks were set at 465 million bushels. And the season-average prices estimates were lowered as well. The midpoints on the price ranges now set at $3.65 per bushel for corn (down 15 cents) and $8.90 per bushel for soybeans (down 25 cents).

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Acreage Adjustment (10/9/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbIt took until the October reports, but USDA adjusted its crop acreage estimates for corn and soybeans down. Corn area was reduced by a half of a million acres. Soybeans lost 1.1 million acres. These moves more than offset the slight yield bump USDA projected. The national corn yield estimate was raised a half of a bushel to 168 bushels per acre. The national soybean yield estimate increased a tenth of a bushel to 47.2 bushels per acre. National corn production was lowered by 30 million bushels; national soybean production was reduced by 47 million bushels.

There were no adjustments made to new crop corn demand. So the drop in production led to a slight increase in USDA’s projection for the marketing year average price. The midpoint of their price range now sits at $3.80 per bushel, up 5 cents from last month. New crop soybean demand took a hit though. While domestic crush increased 10 million bushels, soybean exports were dropped by 50 million bushels. And USDA held firm on their soybean marketing year price range, with the midpoint remaining at $9.15 per bushel.

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Mixed News in the Reports (9/11/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbDemand for the 2014 crops came out a little stronger, but the prospects for the 2015 crop production remain at or above trade expectations. Starting with demand for the old crop, the estimates show a little across-the-board surge to finish out the marketing year. Corn demand via ethanol was raised 5 million bushels; corn usage in sweeteners and other food products rose 10 million bushels; and exports jumped 25 million bushels. For soybeans, old crop demand increased both domestically (up 23 million bushels) and internationally (up 10 million bushels). The increase in demand lowered ending stocks going into the 2015 marketing year. But the impact on the season-average price was rather small, with the corn price lowered 2 cents to $3.68 per bushel, while the soybean price was raised a penny to $10.06 per bushel.

Looking forward to this fall’s harvest, USDA’s projections were reduced on the corn side, but increased for soybeans. The national corn yield estimate was dropped to 167.5 bushels per acre. While record yields are still being projected for several states, the conditions through August resulted a one to three bushel reduction in expected yields across the upper Midwest. Overall, corn production is estimated at 13.585 billion bushels, down roughly 100 million from last month and down 630 million from last year. But that is still strong enough to be the 3rd largest corn crop in U.S. history. The national soybean yield estimate rose to 47.1 bushels per acre, up 0.2 bushels. Iowa, Illinois, and Indiana soybean yields were all raised by a bushel, with Iowa projected at a record 53 bushels per acre. The current soybean crop estimate puts U.S. total production just 34 million bushels below last year’s record. So the supply side of the market remains robust.

The demand outlook for the 2015 crops was mixed. Soybean demand is up slightly, as domestic usage was raised 8 million bushels. The projection for soybean exports was held steady as 1.725 billion bushels, down 110 million from last year. For corn, feed and residual demand was lowered by 25 million bushels. But corn sweetener demand was expected to rise by 5 million bushels and exports were held steady with last month’s projections. The projected ending stocks for the 2015/16 marketing year now stand at 1.59 billion bushels for corn, down 121 million from last month, and 450 million bushels for soybeans, down 20 million from last month. Based on these adjustments, USDA raised the midpoint on their season-average price range for corn back to $3.75 per bushel, but kept the soybean price at $9.15 per bushel. Futures prices before the release of the reports had pointed to 2015/16 season-average prices below those levels, indicating corn in the $3.50 range and soybeans around $8.25-8.50. So the USDA report does offer some hope for slightly higher prices as we move through the marketing year, but the improvement will not be very large.

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Trade Expected Smaller Crops, Got Bigger Ones (8/12/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbIn preparation for the release of the August USDA crop reports, the see-saw of uncertainty about crop production and yields went through another up-and-down cycle. The release of the reports accelerated the down cycle. The trade had anticipated smaller crop estimates from USDA, with the average estimates weighing in with yields of 164.5 bushels per acre for corn and 44.7 bushels per acre for soybeans. USDA reported yield estimates of 168.8 bushels per acre for corn and 46.9 bushels per acre for soybeans. Even with a slight downshift in soybean plantings, corn and soybean production estimates increased and put the 2015 crop year on pace to be a very strong production year despite all of the weather issues. And while there was some positive news on the demand front with feed and ethanol demand increasing, stock levels are on the rise and price estimates retreated. USDA’s season-average price estimates for the 2015/16 crops dropped by 10 cents for both corn and soybeans. They now stand at $3.65 per bushel for corn and $9.15 per bushel for soybeans.

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Demand Remains Robust (7/10/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbThe July USDA World Ag Supply and Demand Estimates (WASDE) report held some interesting nuggets for the market to chew on. Starting with the 2014 crops, demand remained robust as all of the major demand sectors were increased for the crops in the bins. Corn feed demand was increased 50 million bushels. Ethanol demand for corn was raised 25 million bushels. Corn export demand was also increased 25 million bushels. Soybean crush bumped up 15 million bushels and soybean exports were increased the same amount. These changes pulled 2014/15 ending stocks below the average trade expectations and allowed USDA to increase its season-average price estimate for corn to $3.70 per bushel, up 5 cents from last month. The soybean season-average price estimate remained at $10.05 per bushel.

Looking at the 2015 crops, the acreage numbers from last month’s report were the only update on the supply side. So yield and production estimates came in above trade expectations as the trade was looking for a downshift in yields given the weather issues this spring and summer. Current estimates have the national average corn yield at 166.8 bushels per acre and the national average soybean yield at 46 bushels per acre. Given the June acreage numbers, that would put production at 13.53 billion bushels for corn and 3.885 billion bushels for soybeans. Both of those numbers were roughly 100 million bushels above trade expectations.

On the demand side for the 2015 crops, the news was mixed. Increases were reported for corn usage in ethanol and for soybean crush. However, corn feed usage and exports were lowered. The end result is lower 2015/16 ending stocks than previously estimated by USDA, but the numbers still exceeded trade expectations. Corn stocks were projected at 1.6 billion bushels, while soybean stocks stood at 425 million bushels. With the tightening of the stocks for 2015/16, USDA increased both the corn and soybean season-average price estimates by 25 cents per bushel, with corn at $3.75 per bushel and soybeans at $9.25 per bushel.

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Relatively Quiet Report for Corn and Soybeans (6/10/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbThere are only a few changes in the U.S. corn and soybean outlooks from USDA. For corn, the only change is a 25 million drop in corn usage for ethanol from the 2014 crop. All other supply and demand numbers remain the same. And the season-average price midpoints hold at $3.65 per bushel for the 2014 crop and $3.50 per bushel for the 2015 crop. For soybeans, demand is ratcheted up a little bit. On the 2014 crop, both domestic crush and export demand are raised 10 million bushels. On the 2015 crop, crush is raised another 5 million bushels. Combined, this lowered 2015/16 soybean ending stocks to 475 million bushels. But the price outlook holds steady at $10.05 per bushel for the 2014 crop and $9.00 per bushel for the 2015 crop.

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Old vs. New Crop (5/12/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbWith the May monthly reports, USDA provides an update on old crop data and a forecast on new crop information. For soybeans, the old crop news was mixed. Domestic crush and export demand were both raised by 10 million bushels. That lowered projected 2014/15 ending stocks by 20 million bushels, but that still leaves 350 million bushels in storage as we enter the next marketing year, more than triple what we had to begin this marketing year. But despite the increase in old crop demand, the season-average soybean price for 2014/15 was reduced by 5 cents to $10.05 per bushel. For the 2015/16 soybean crop, the acreage and yield remained steady with earlier USDA estimates. So the market is staring at 84.6 million acres of soybeans with an expected yield of 46 bushels per acre. The combination would produce 3.85 billion bushels of soybeans, the 2nd largest soybean crop on record. And while overall soybean demand is projected to be steady, domestic demand is seen increasing, while international demand is expected to fall slightly. Ending stocks are expected to build to 500 million bushels and the first official estimate of the 2015/16 season-average price is $9 per bushel.

The story for corn is a little different. Old crop demand is shrinking slightly, mainly in the food, seed, and industrial sector. Export demand is up 25 million bushels, but the nearly 50 million bushel drop in food, seed, and industrial use more than offset the international boost. 2014/15 ending stocks now top 1.85 billion bushels and the season-average price was lowered 5 cents to $3.65 per bushel. On the new crop, like with soybeans, the production numbers were unchanged from earlier estimates, 89.2 million acres planted with a yield of 166.8 bushels per harvested acre. So production is estimated at 13.63 billion bushels, projected to be the 3rd largest corn crop. New crop demand is expected to rise, with a 50 million bushel rise in feed demand, a 13 million bushel increase in food, seed, and industrial use, and a 75 million bushel growth in export demand. With the growth in demand, 2015/16 ending stocks are forecast to be roughly 1.75 billion bushels and the first official estimate of the 2015/16 season-average price is $3.50 per bushel.

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Ready to Plant

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA reports.

Hart_Chad-thumbFarmers provided their first outlook on the 2015 crop year with the release of USDA’s Prospective Plantings report. And the general shift is along the lines that the market expected. Corn planting intentions came in at 89.2 million acres. That’s 200,000 acres more than USDA’s early estimate and a half of million acres more than the average trade guess, but it’s still 1.4 million acres less than was planted last year. Illinois, Indiana, and Iowa all reduced corn intentions slightly, but there are offsetting increases on the fringes of the Corn Belt. The largest moves are in Minnesota, up 300,000 acres, and South Dakota, down 600,000 acres. Soybean planting intentions are at a record 84.6 million acres. That is well above USDA’s early estimate of 83.5 million acres, but below the average trade guess at 85.9 million acres. The I-states all increased soybean intentions, with Iowa topping 10 million acres. The big movers are Nebraska, down 300,000 acres, and Ohio, up 250,000 acres. Given USDA’s trend yields, the acreage numbers imply expected crops of 13.625 billion bushels for corn and 3.85 billion bushels of soybeans.

These projected large crops are coming on top of last year’s record crops. The Grain Stocks report was also released today and it showed more crop still sitting in storage. Soybean stocks came in at 1.33 billion bushels, up 34 percent from last year, even though disappearance was slightly higher. Corn stocks stand 7.74 billion bushels, up 11 percent from last year, as disappearance was basically flat. The main punchline from today’s reports is that supplies continue to build and while demand is growing, it will take a while to work through the expected production. Prices have lowered to reflect this and these reports don’t change that dynamic.

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Finding a Little More Demand for Corn (3/10/15)

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

Hart_Chad-thumbWith the mid-March USDA supply and demand report, the corn picture is a little brighter today. Feed demand was increased to 5.3 billion bushels as the expansion in the livestock sector continues. Corn demand via ethanol was lowered 50 million bushels, but still stands at 5.2 billion bushels.  Processing efficiency at ethanol plants has improved and USDA incorporated that efficiency change in this update. So the feed and ethanol changes offset each other. But with corn exports also shifted up 50 million bushels, the overall demand structure for corn continues to grow. With total use now estimated at just under 13.7 billion bushels, corn demand is at record levels. And while ending stocks are projected to increase from last year, the growth in stocks is not as large as once feared. Given the improving demand, USDA increased the midpoint of its season-average price range 5 cents, to $3.70 per bushel.

For soybeans, this was a very quiet report on the domestic front. There were no changes to the U.S. soybean balance sheet. Domestic crush demand is projected at 1.795 billion bushels. Soybean exports are set at 1.79 billion bushels. Ending stocks are estimated at 385 million bushels, up from 92 million the year before. And the midpoint of the season-average price range is set at $10.20 per bushel. Globally, soybean production is at record levels as well. But global soybean trade is growing to work through the large supplies.

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