The September World Agricultural Supply and Demand Estimates report released by the Agriculture Department forecasts a bin-busting corn crop coupled with significantly smaller projected ending-stocks for soybeans.
September’s WASDE report projected the 2013 corn crop at 13.84 billion bushels, which would be a record crop, if realized, and more than a 3 billion bushel increase compared to 2012. The report estimates the 2013 corn yield at 155.3 bushels per acre, up slightly from the prior month’s forecast.
“This is a later maturing crop than 2012 so the yield projections become more accurate as the crop becomes ready for harvest,” explained Todd Davis, American Farm Bureau Federation economist.
The USDA report predicts 2013-14 corn ending stocks to drastically increase to 1,855 million bushels, from 661 million bushels for 2012-13.
“The U.S. corn market will shift from a 21-day end-of-year supply to a 53-day end-of-year supply. This increase in stocks will cause prices to decline from a marketing-average price of $6.90 per bushel for 2012-13 to a projected $4.80 per bushel in 2013-14,” said Davis.
The 2013 U.S. soybean crop is projected at 41.2 bushels per acre. This is down from the August estimate and reduces the projected soybean crop by 36 million bushels from the previous estimate to a 3.15 billion bushel crop for 2013-14.
The 2013-14 soybean ending stocks are expected to sharply decrease from the August estimate, to 150 million bushels. If realized, soybean stocks are projected to increase by only 25 million bushels over the 2012-13 marketing year. Looked at another way, 150 million bushels in stocks equates to about 17 days of soybeans in the grain bins on Sept. 1, 2014.
Even so, the projected marketing-year average price for soybeans is expected to decline from $14.40 per bushel for 2012-13 to $12.50 per bushel for 2013-14, although this estimate is up slightly from the prior month.
Soybean prices will be less connected to corn, in the coming year, according to Davis.
“Market dynamics are changing compared to what farmers have seen over the last three years or so,” Davis said.
“Soybean prices have been following the corn market the last three years but are now poised to separate from corn,” said Davis. “As corn stocks are projected to increase, the corn price will have limited upside potential as the market has to clear. Soybeans are projected to continue to have tight stocks, which will keep prices high enough to ration use throughout another marketing-year.”
The report from USDA incorporates farm production information in the supply and demand estimates but does not adjust acreage estimates. USDA will publish a revision to its acreage estimates in October adding another bit of uncertainty to the market.