Corn and soybean production—some unfinished business

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article


URBANA, Ill. – The USDA’s September corn and soybean production forecasts were reasonably close to the average trade guesses reported before the release of the September Crop Production report, according to a University of Illinois agricultural economist.

“Corn prices drifted lower following the report, reflecting expectations of a crop large enough to allow some rebuilding of stocks,” said Darrel Good. “Soybean prices initially moved higher after the forecasts were released, reflecting expectations of smaller forecasts in future reports.  Prices have now returned to pre-report levels.”

Good said that prices will likely continue to be unsettled as harvest reports become more numerous and the market forms expectations about the October production forecasts. “In each of the previous three years, when the U.S. average corn yield was below trend value, the October production forecast was below the September forecast,” Good said. “The difference ranged from 21 million bushels last year to 496 million bushels in 2010. Over the past 30 years, however, the October forecast was above the September forecast in 18 years and below the September forecast in 12 years.

“This year, there continues to be a range of expectations about both the October forecast and the final estimate of the U.S. average corn yield,” Good said. “Yield uncertainty is increased by the generally dry end to the growing season in many areas and by the late maturity of the crop where planting was delayed.”

Over the past 40 years, the largest declines in the U.S average yield forecast from September to October occurred in 1974 (4.3 bushels), 1995 (4.5 bushels), and 2010 (6.7 bushels). In percentage terms, the largest decline was in 1974 (5.5 percent) when widespread early frost damaged a late-maturing crop.

“Barring widespread early frost damage this year, the yield forecast in October is not expected to differ enough from the September forecast to alter the prospects for rebuilding stocks during the year ahead,” Good said.

According to Good, corn production uncertainty this year also comes from uncertainty about the magnitude of the area to be harvested for grain.The USDA’s June Agricultural Survey revealed more corn acreage planted and to be harvested for grain than expected by the market. On August 15, the USDA’s Farm Service Agency (FSA) released a prevented acres report that indicated 3.4 million acres of corn were prevented from being planted this year due to adverse weather conditions. That report fueled expectations that USDA’s National Agricultural Service (NASS) would eventually reduce the estimates of planted acreage and acreage harvested for grain, Good explained. “Typically, FSA-certified acreage data is reflected in the October Crop Production report,” he said. “FSA is scheduled to release updated estimates of planted acreage on Sept.17. That report will influence expectations for the acreage estimates in the October Crop Production report. Without a change in the yield forecast, prospects for 2013-14 marketing-year ending stocks below 1.5 billion bushels would require NASS to lower the harvested acreage estimate by more than 2 million acres. Such a large reduction seems unlikely,” Good said.

Uncertainty about the NASS October forecast and the final estimate of the U.S. average soybean yield also reflects late-season heat and dryness in a large portion of the production area and late maturity in some areas. Good said that some of the impact of adverse weather was likely reflected in the September yield forecast that was 1.4 bushels below the August forecast. “Most do not expect the October forecast to be above the September forecast, but there is little agreement on the possible magnitude of a smaller forecast,” Good said.

Over the past 40 years, the decline in the U.S. average yield forecast from September to October was one bushel or more in only five years: 1974 (1.1 bushels), 1980 (1.0 bushel), 1995 (1.1 bushels), 1998 (1.9 bushels), and 2003 (2.4 bushels).

“Given the severity of August and early September weather, a decline of one bushel or more certainly seems possible this year,” Good said. “However, a decline of 0.3 bushel or more would point to the need to further reduce consumption of U.S. soybeans during the current marketing year unless harvested acreage exceeds the current estimate. The confidence in the current NASS forecast of harvested acreage is bolstered by the additional survey efforts in July.

“At this juncture, there is a high probability that the 2013 U.S. corn crop will be large enough to result in a meaningful increase in stocks by the end of the current marketing year,” Good said.  “Prospects of ample supplies point to an average marketing-year farm price in the mid-$4 range.  Cash prices would be expected to follow a typical large-crop pattern of establishing lows at harvest time followed by modest increases that would about cover the cost of storage,” he said.

Good concluded that soybean prices are expected to remain high relative to corn prices with a marketing-year average farm price in the high-$12 range. “The price pattern for soybeans may follow more of a short-crop pattern, however, particularly if the production forecast declines in October,” Good said. “Such a pattern would point to the highest prices at harvest and declining prices as consumption adjusts and the South American crop advances.”


Prev 1 2 Next All



Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Liquid Blockage Monitor System

CDS-John Blue allows you to know your liquid application flow from the cab of your tractor. Our patent pending system ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form