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USDA sticks with record 2014 corn yield estimate

 

 

By MICHELE F. MIHALJEVICH

Indiana Correspondent

 

WASHINGTON, D.C. — The United States is on pace for record corn and soybean production this year, according to the latest numbers from the USDA.

Corn production is projected to be 14.4 billion bushels, based on conditions as of Sept. 1. That number is up 3 percent from the August forecast and from 2013, the agency said last week. Soybean production is also expected to be up 3 percent from the August estimate, to a record 3.91 billion bushels; that would be a 19 percent increase over last year.

The USDA’s National Agricultural Statistics Service (NASS) released its most recent Crop Production report Sept. 11. If conditions hold, corn yields are expected to average 171.7 bushels per acre, up 4.3 from its August report and 12.9 bushels more than in 2013. The 2014 corn crop would represent the highest yield and production on record for the country, NASS said.

Harvested corn for grain is forecasted to be 83.8 million acres, unchanged from August but down 4 percent from 2013.

For soybeans, average yields are projected to be a record high 46.6 bushels per acre, up 1.2 from August and 3.3 from last year. Harvested acreage is expected to be a record 84.1 million, unchanged from August but up 11 percent from 2013.

The corn production numbers were at the high end of average pre-report trade estimates, said Jack Scoville, futures market analyst with Price Futures Group. The soybean figures were also a little higher than expected. "The talk had been that USDA might be conservative in its estimates and come in a bit lower," he said. "The point is, these are just big crops."

The USDA’s corn yield numbers were above average trade expectations of 170.7 bushels but below the pre-report estimate of 174.1 from INTL FCStone, said Kyle Schrad, a risk management consultant with the company.

"I think that 174 to 175 is probably more a proper reflection of where the market believes this crop will be toward the end of this year – potentially even above that," he explained. "Corn condition ratings released earlier (last) week are the highest since 1992, so you’re really seeing some positive signs there in terms of what the yield expectation is.

"The USDA has been very conservative in terms of upping that yield until we really get later in the year. They typically make the big adjustments in the October report, and then moving forward into the January reports."

The markets may be looking past the September report and to those in October and November, plus also to information on the soon-to-be planted soybean crop in South America, said Bill Tierney, chief economist with AgResource Co.

"Over the last 10 years or so, I think it’s more important to the market what the South American crop is going to be," Tierney stated.

"Today, the majority of the soybeans and soy meal that’s exported in the world comes from South America. The South American crop, particularly Brazil and Argentina, is significantly larger than even this record U.S. crop that’s expected.

"We’re not going to start planting the Brazilian crop until next week. So the larger crop – the one that’s more important to the world market – hasn’t even been planted yet."

Supply, demand forecasts

 

The USDA also released its World Agricultural Supply and Demand Estimates report last week. In it, the agency projected corn ending stocks at 2 billion bushels, up from 1.8 billion in August and 1.2 billion last year. The agency expects demand growth for feed and overall domestic use, while ethanol use is projected to remain steady. Exports are anticipated to be down from a year ago.

The USDA’s corn ending stocks number was fairly in line with trade expectations, Scoville said. "The USDA found quite a bit of feed demand," he noted. "We’ll have to see if that comes to be true."

Many in agriculture are questioning why grain prices have dropped from their levels of a year ago and why they continue to go down, said Corinne Alexander, associate professor of agricultural economics at Purdue University.

"The main reason why grain prices are lower than where they’ve been is that we’re in a world now where world supply has caught up with demand," she noted. "We have been coming out of a period where for multiple years we have seen world supplies be substantially below where world demand was, and now we’ve had two good crops in a row globally. U.S. and global yields are both very good in 2014, and we see these inventories growing because supply is exceeding demand."

Average farm corn prices for the 2014-15 crop are projected to be $3.20-$3.80 a bushel, down from the August figures of $3.55-$4.25, the USDA said. Last year, they were $4.45.

"We need to give people a reason to plant and to plant corn," Scoville said. "Corn will have to give guys a reason to plant it next spring."

The agency’s soybean ending stocks number of 475 million bushels indicates beans are plentiful, Scoville noted. The figure is up from the August projection of 430 million bushels and last year’s 130 million. USDA predicts an increase in crushings and exports but a drop in seed usage. Average farm soybean prices were forecasted to be $9-11 for 2014-15, down from $9.35-$11.35 in the USDA’s August report and $13 last year.

The USDA projected wheat ending stocks of 698 million bushels, an increase from the August figure of 663 million and last year’s 590 million. A usage increase is expected for food but decreases are projected for exports, seed, feed and residual. Average farm wheat prices for the 2014-15 crop are expected to be $5.50-$6.30, down from $5.80-$6.80 in August and $6.87 in 2013. "There’s tremendous competition all around the world (for wheat)," Scoville noted. "There’s just no shortage of wheat around the world, and the U.S. will have to fight for all the exports it can get."

9/17/2014