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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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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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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Small Adjustments This Month (7/11/13)

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

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This morning’s supply and demand report mostly held to expectations.  Old crop stocks remain very tight, while new crop stocks are projected to increase.  Acreage was set by the June “Acreage” report and yields were held steady.  That put an additional 30 million bushels of soybeans in the 2013/14 projections, while corn production slipped by 55 million bushels.  On the demand side, there were no adjustments to soybean demand.  Corn feed was raised 50 million bushels for old crop, but lowered 50 million for new crop.  New crop exports were also lowered 50 million.  In the end, projected 2013/14 prices remain the same, $4.80 for corn and $10.75 for soybeans.

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