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Record crops projections bury grain markets

August 25, 2017
By KAREN SCHWALLER - Farm News staff writer (kschwaller@evertek.net) , Farm News

Market reaction to the USDA's latest crop report was negative enough to send soybean prices plummeting 35 cents/bushel and corn down 15 cents/bushel only one hour after the report was released.

These market lows reflected the USDA's latest crop report prediction that record crops are in the fields waiting to be harvested. Soybean production is forecast at 4.38 billion bushels, while corn growers are expected to decrease their production by 7 percent from last year, coming in at 14.2 billion bushels.

The harvested area for this fall is projected at 88.7 million acres, up 7 percent from last year, with planted area for the nation estimated at a record high 89.5 million acres. That number is unchanged from the June estimate.

USDA soybean yields are predicted at 49.4 bushels per acre, down 2.7 bushels from last year. The USDA's report said record soybean yields are expected in Delaware, Georgia, Kentucky, Missouri, Mississippi, Pennsylvania and South Carolina. National Ag Statistics Service (NASS) predicts record high yields in Alabama, Louisiana, Michigan, Mississippi, New York, Pennsylvania and South Carolina.

The report showed the average U.S. corn yield to be 169.5 bushels per acre, down 5.1 bushels from last year. If these numbers are realized, this year could show the third highest yield and production on record for the U.S., according to USDA figures.

Projections for acres planted to corn come in at 90.9 million, unchanged from NASS' previous estimate.

As of July 30, 61 percent of this year's corn crop was reported in good or excellent condition, 15 percentage points below the same time last year.

"These numbers did not take into account the July weather, field conditions or crop conditions," said Darin Newsom, senior analyst for DTN. "It did not take into account all the heat in Iowa and western Illinois, the decimated crops in the Western Plans states, the flooding in the Eastern Cornbelt."

Still, Newsom said the numbers reflected the third largest crop on record, despite the fact that four million less acres were planted. Corn production was pegged at 15,148 million bushels, down from the July number.

Old crop ending corn stocks were at 2,370 million bushels, above the average report estimate.

"We've seen exports slowing down," he said. "Shipments are solid but we're losing ground. By the time we have the September quarterly stocks numbers, we'll find out if we shipped more corn, fed more corn or both."

Newsom said soybean numbers also did not account for the drought conditions across the nation's Cornbelt. USDA's soybean figures showed domestic old crop soybean ending stocks at 370 million bushels, 90 million bushels less than expected.

"It's exactly what the USDA does-underestimate the demand or overestimate the supply," said Newsom.

World ending stock numbers for all grains are predicted to be down for this year's and next year's harvest seasons.

"The numbers are all bearish," said Newsom. "If we continue to let these reports be released we will have to learn to live with the numbers. It looked like we had bullish numbers going into this thing, but it's just not going to happen."

Newsom said USDA's estimate of global ending corn stocks for 2017-2018 was increased slightly from 200.81 million metric tons (mmt) to 200.87 mmt, more than expected. Also, its estimate of world ending soybean stocks for 2017-2018 was increased from 93.53 mmt to 97.78 mmt, also more than expected.

Newsom said current corn prices are holding at $3.32, with an average price of $3.25 to $3.30. He said corn is priced according to what's on hand, and that today's corn is "over-priced" according to USDA's report.

In summarizing, Newsom said the hot, dry weather meant nothing to the corn yield in the USDA's report, and that corn remains on a sideways trend. He said many non-commercial positions could liquidate if they wanted, but that could press producers toward major lows beyond what is being seen today.

Newsom said old crop soybean ending stocks are coming down as expected, and that November beans are possibly heading for support at $9.30/bushel.

"If that does not hold, then we're looking at going down to the $8.44 mark on soybeans," Newsom said.

 
 

 

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