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