November USDA WASDE Summary

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

Compared to trade expectations, USDA lowered corn and soybean yield and production estimates and raised corn exports by more than expected. The slide in yields was across a broad swath of the country, reflecting the longer-term impacts of the drought and the extremely dry crops were brought in (yield loss due to crop moisture being below to well below average). Corn dropped 2.6 bushels per acre, knocking 215 million bushels out of total production. Soybeans dropped 1.2 bushels per acre, taking 98 million bushels out. For soybeans, the yield drop dominated the other small tweaks and the lack of adjustments to crush and exports. With the new soy stocks to use ratio now below 5%, the report provided another upward leg for the soybean market. USDA raised its 2020/21 season average to $10.40, the futures market was already at $10.60 and added roughly 30 cents today.

For corn, the yield drop was only part of the story. USDA also projected exports to rise to 2.65 billion bushels, a record. The export rise can be chalked up to a near doubling of expected corn sales to China. Most of those Chinese sales have already been made (roughly 85%), but only 15% of the targeted exports to China have been delivered at this point. 2020/21 ending stocks were lowered to 1.7 billion bushels (lowest level since 2013/14) and the USDA season-average price estimate rose to $4 per bushel. The futures market was at roughly $3.70 before the report, so for corn, USDA is already projecting continued price strengthening.

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September’s USDA WASDE Summary

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

For corn, national yield was set back to 178.5 bushels per acre, down 3.3 bushels per acre and even with USDA’s earlier trend. With the downward adjustment in harvested area, that subtracts 378 million bushels from production, lowering total production to 14.9 billion bushels. Iowa was estimated at 191 bu/ac (down 11 bu/ac). Illinois was set at 203 bu/ac, down 4 bu/ac. Minnesota was set at 200 bu/ac, up 3 bu/ac. Indiana was set at 186 bu/ac, down 2 bu/ac. On the demand side, exports were lowered 30 million bushels on old crop, but raised 100 million bushels on new crop. Feed and residual was lowered 100 million bushels as well, but the change here is more related to the thought that smaller crop, smaller losses than reduced feed consumption. And ethanol was lowered 5 million bushels for old crop and 100 million bushels for new crop, on the continued drag in fuel usage. The result is 2020/21 ending stocks declined by 253 million and the 2020/21 season-average price estimate rose 40 cents, to $3.50 per bushel.

For soybeans, national yield was set at 51.9 bu/ac, down 1.4 bu/ac from last month. That subtracts 112 million bushels from production, lowering total production to 4.313 billion bushels. Iowa was estimated at 54 bu/ac, down 4 bu/ac. Illinois was set at 62 bu/ac, down 2 bu/ac. Minnesota was set at 52 bu/ac, up 1 bu/ac. Indiana was set at 60 bu/ac, down 1 bu/ac. On the demand side, no adjustments to new crop. Old crop crush was raised 10 million and old crop exports were raised 30 million. Like with corn, soybean 2020/21 ending stocks fell by 150 million bushels and the 2020/21 season-average price estimate rose 90 cents, to $9.25 per bushel.

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Yield Adjustments, but Still Record Crops (10/12/16)

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

Hart_Chad-thumbUSDA updated its projections for the 2016 corn and soybean crops. And while the national corn yield is reduced, the national soybean yield is increased and record production is still on the books for both crops. The national corn yield is set at 173.4 bushels per acre, down a bushel from last month, but still 2.4 bushels above the previous record set in 2014. With the yield this high, a 15 billion bushel corn crop is projected to be heading in from the fields during harvest. Combined with the 1.7 billion bushel carryover, total corn supplies for the 2016/17 marketing year stand at 16.85 billion bushels. Corn usage is also projected at record levels, but demand has not been able and is not projected to keep up with the supply surge. Corn export projections are raised 50 million bushels, bringing total usage up to a record 14.5 billion bushels. The end result is an ending stock level roughly 600 million bushels higher than we had for the 2015/16 marketing year, but slightly lower than last month’s estimate. That slight tightening of ending stocks gave USDA a little room to raise their projected price range by 5 cents per bushel, with the midpoint now at $3.25 per bushel.

The national soybean yield is projected at 51.4 bushels per acre, up 0.8 bushels from last month and well above the previous record. With production approaching 4.3 billion bushels, the soybean market has never had more beans to work with. So again, it’s a story of record supplies and demand, but demand growth lags behind supply growth. Soybean export projections are raised 40 million bushels, bringing total usage to 4.1 billion bushels. But ending stocks are projected to double and price projections are held steady, with the midpoint of the season-average farm price range set at $9.05 per bushel.

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Stocks Inline with Expectations (9/30/16)

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

Hart_Chad-thumbStock levels for corn and soybeans were up in the most recent USDA report, but the trade expected that as we move into the next marketing year. Corn ending stocks were estimated at 1.74 billion bushels, up just 6 million bushels from last year. While total corn stocks are about the same, farmers are holding more back on the farm than they did last year. Strong demand from the ethanol and export sectors boosted June-August corn disappearance by 9 percent. For soybeans, we entered the 2016/17 marketing year with 197 million bushels in storage. That’s 3 percent above last year’s level. And reversing the pattern for corn, less soybeans are being held by farmers on the farm. Summer crush and export demand were firm as well, with June-August soybean disappearance increasing by 55 percent. So the stocks report confirmed strong demand for corn and soybeans, but stocks still grew year-over-year.

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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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