Plans for a Whole Lot of Corn (3/31/16)

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

Hart_Chad-thumbThe end of March is an active time for the crop markets and USDA. It’s when we get our first look at the 2016 crop year from the producers’ perspective with the release of USDA’s Prospective Plantings report. We also receive an update on demand via USDA’s Grain Stocks report. And as we typically see, these reports contained a few surprises to mull over as planting approaches, mainly for new crop prospects. Starting with the stocks/demand picture, the trade estimates going into the stocks report were fairly close to the USDA numbers. As of March 1, 7.81 billion bushels of corn were being held in storage. That’s 1% higher than last year at this time. Quarterly corn disappearance for the December-February time frame was 3.43 billion bushels, slightly lower than last year. Overall corn demand and usage has been relatively stable. Soybean stocks came in at 1.5 billion bushels, up 15% from last year. That is the highest soybean stock number for March since the 2006/07 crop. Quarterly soybean disappearance for the December-February time frame was 1.18 billion bushels, 1% lower than last year.  So the build-up of soybean stocks has more to do with supply than demand. In total, old crop usage turned up to be in-line with expectations.

That’s not the case with plantings and the potential for new crop production. The biggest discrepancies between trade expectations and the planting report were for corn and wheat. Projected corn plantings came in at 93.6 million acres. The trade expectation was roughly 90 million. So prospective corn plantings are 3.6 million above expectations and 5.6 million above last year. Meanwhile, projected wheat area dropped to 49.6 million acres, roughly 2 million below expectations and 5 million below last year. Soybean planted area was also down to 82.2 million acres, which was 800,000 less than expectations and 450,000 below last year. Looking at specific state projections, the boost in corn area is coming mostly from the Great Plains and Corn Belt. The largest moves are in Kansas and North Dakota, adding 650,000 acres each, as traditional wheat area heads to corn production. Illinois and Iowa are adding 400,000 corn acres each this year. Out of the 48 states listed in the corn table, only 7 are projected to have fewer corn acres than last year, with the largest reduction being 20,000 acres. The soybean planting story hinges mainly on Missouri. Missouri farmers indicated they would plant nearly one million more acres of soybeans this year, following the planting issues they had last year. Illinois and North Dakota are projected to gain significant soybean area as well.  However, many states (including Iowa) are projected to lower soybean plantings. Iowa and 9 other states are set to reduce soybean plantings by at least 100,000 acres each. Hence, despite the strong surge in area from Missouri, the national soybean planting area is projected to decline.

Given trend yields of 168 bushels per acre for corn and 46.7 bushels per acre for soybeans, the projected acreage points to another round of massive crops. Corn production would reach 14.38 billion bushels, which would be another record corn crop. Soybean production would approach 3.8 billion bushels, which would be the 3rd largest soybean crop in history. And for markets already dealing with large supplies, these prospective plantings do not help. So the markets will be looking for Mother Nature to slow the supply train down.

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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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Some Crops Grow Without Rain (9/12/13)

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

97hartsmThe latest USDA updates showed a growing corn crop and a shrinking soybean crop. The projections for corn put the nationwide average yield at 155.3 bushels per acre, up 0.9 bushels from last month and over 30 bushels better than last year. That puts corn production at 13.84 billion bushels, a record by over 700 million bushels. Soybean projections are a nationwide yield of 41.2 bushels per acre and production in the 3.15 billion bushel range. That soybean yield is down 1.4 bushels from last month, but still 1.6 bushels better than last year.

On the demand side, the changes were concentrated. For corn, all of the shifts were on the old crop with feed, ethanol, and export demand being raised. New crop corn demand was left unchanged. For soybeans, the major demand shifts were for the new crop as domestic crush and export demand were both lowered as we enter the marketing year. In the end, corn’s supply gains outweighed the demand shifts, so 2013/14 projected ending stocks are up slightly compared to last month’s projections, to 1.855 billion bushels. With that slight increase, USDA lowered the midpoint of its season-average price range to $4.80 per bushel. For soybeans, the supply moves also outweighed the demand shifts, but the moves were in the opposite direction from corn. So 2013/14 ending stocks tightened back to 150 million bushels and the midpoint of the season-average price range jumped $1.15 to $12.50 per bushel.

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