farmgate: Despite June Floods, The Crop Keeps Getting Bigger.
USDA’s first field-based estimate of the new corn and bean crop spurred farmer curiosities of where that much grain was found. Nevertheless, 12.288 billion bushels of corn and 2.973 bushels of soybeans are the latest figures for the market to trade. While December corn opened lower, it closed higher than 3 of the past 4 trading sessions. Beans opened higher and stayed above the four month lows set last week. We’ll explore the report in detail.
USDA statisticians re-interviewed about 9,000 farmers to compare their acreage with the June 30 Planted acreage report, and revised corn acres down by 350,000, and placed planted acreage at 86.977 million. Harvested acres will be 79.29 million, 350,000 more than forecast in June. Acreage estimates were reduced in IL, IN, MO & WI, but USDA found 10 Cornbelt states with record high stalk counts. USDA acknowledges the late planting and delayed maturity, however crop estimates are made based on normal weather for the balance of the growing season. Currently, the national average corn yield was pegged at 155 bushels per acre, putting production just under 12.3 billion bushels.
Corn use for feed was raised 100 million bushels to 5.3 billion bushels for the coming marketing year, ethanol use of corn was raised to 4.1 billion bushels, up 150 million bushels from the July estimate, and exports were kept at an even 2 billion bushels. Ending stocks were raised from 833 million to 1.133 billion bushels. The average farm price estimate was lowered by 60¢ per bushel to range of $4.90 to $5.90.
Planted acreage for soybeans was placed at 74.8 million with harvest expectations at 73.341 million, up 1.2 million from the June report. USDA also indicated the late planting caused maturity delays for both blooming and pod setting. The national average soybean yield was estimated at 40.5 bushels per acre with production calculated at 2.973 billion bushels.
Soybean use in the domestic crush was forecast by USDA at 1.815 billion bushels, down 15 million. Exports were kept at 1 billion bushels, and ending stocks were estimated at 135 million. The season average price was dropped by 50¢ per bushel from July to a range of $11.50 to $13 per bushel.
University of Illinois marketing specialist Darrel Good says the market was expecting the numbers reported Tuesday by USDA, and that is why significant market moves did not develop. In his weekly newsletter, Good says the market will be watching for adjustments to the August estimates when the September crop report is released. However, he said the report indicated that crop ratings remained steady after several weeks of improvement, and with crop maturity lagging behind the average, frost would potentially damage it, and that will curtail production.
At Iowa State marketing specialist Chad Hart's analysis expects downward pressure on crop prices, particularly if crude oil prices continue to fall and the value of the dollar continues to rise. Crude oil keeps ethanol profits and corn prices buoyant, and the higher dollar dampens export interest.
At the University of Missouri marketing specialist Melvin Brees in his newsletter reminds farmers that an increasing supply of grain points to lower prices, and that is the reason for USDA taking 60¢ out of the corn price and 50¢ out of the soybean price.
Summary:
Improving crop prospects were reflected in the latest USDA crop report, which was bearish for corn and neutral to bullish for soybeans. Double-checking acreage estimates from the June flood and all of the crops lost to ponding, USDA still found near record production and that caused it to lower estimated prices for the new crop.
How are your yield prospects? From your vantage point, do you agree with USDA? Will the crop size continue to grow and prices decline?
Posted by Stu Ellis on August 13, 2008 12:53 AM to farmgate