Along with the market-based adage “big crops get bigger,” is the old saw that “what goes up must come down.” And with those bits of granddad philosophy the estimated size of the 2009 corn crop apparently peaked just above 13 billion bushels and deterioration problems are bringing it back down. At least that is the essence of USDA’s November Crop Report. Beans? Well, they are another story!

From October to November, USDA lowered its estimate of the corn crop from 13.018 billion bushels to 12.921 billion bushels. For soybeans, the projected size of the 2009 crop rose from the 3.250 billion bushels in October to 3.319 billion in November. The market was looking for a 12.940 billion bushel corn crop and a 3.262 billion bushel bean crop. In the November USDA Crop Production report the USDA’s statisticians trimmed 1.3 bushels per acre from the 2009 estimated yield, partially because of 5 bushel drops in the projected yields for IL and IA. However, the average yield for soybeans was raised 0.9 bushels per acre with the help of three bushel per acre hikes in the estimated yields for IN and KS.

In its Supply and Demand Estimate for November USDA did not change its estimates of feed and ethanol use between the October and November reports, however it clipped 50 million bushels from its estimate of exports, leaving total use at 12.980 billion bushels and ending stocks at 1.625 billion, a shade lower than the 1.672 billion in October. The estimated price range was tightened slightly and raised by 20¢, pushing the season average price upward to $3.55.

For soybeans, the crush was raised by 5 million bushels, exports by 25 million bushels and total use was increased to 3.195 billion. That leaves carryout at 270 million, up from the 230 million in October. USDA also added 20¢ to the average price of beans and the midpoint of the range for the season is now $9.20 per bushel.

Globally, corn production estimates were dropped, not only in the US, but also in Brazil, European Union, Russia, Venezuela, and Canada. Yields were cut in most countries, but acreage was also reduced in Brazil. Coarse grain trade, which includes corn and other feed grains, is projected to be only slightly lower because of the lower corn production, and ending stocks for corn around the world are also estimated to be lower.

Global oilseed production estimates were raised by USDA less than 1%, but helped upward by greater production in the US and South America. Production for the 2009-2010 marketing year are expected to be 1 million tons higher in Brazil because of increased acres, and a half million tons higher in Argentina because sunflower acres are being shifted to soybeans. Global oilseed stocks are forecast to grow 4% because of increased stocks in the US, Brazil, and China. Chinese soybean imports are expected to increase slightly in the new marketing year.

For the balance of the year, University of Illinois marketing specialist Darrel Good says, “Price patterns will now reflect the pace of harvest, which has accelerated rapidly over the past 10 days, the progress of South American crops, and perceptions about the strength of demand. The declining value of the U.S. dollar, higher crude oil prices, and advances in the stock market have been encouraging for demand prospects. Still, soybean prices appear to be a bit over valued in light of the large South American crop prospects. Particularly puzzling is the movement from an inverse to a small carry in the futures price structure given prospects for large supplies next spring.”

At the University of Missouri, marketing specialist Melvin Brees looked at both the crop estimates and the harvest progress report and added, “Monday’s crop progress report showed corn harvest at only 37% complete compared to the average of 82%. This suggests the possibility that additional cuts could be made to expected corn production. Soybean harvest is 64% complete compared to an average of 92%. Most in the market will continue to watch the weather and harvest progress.”

Summary:
The corn crop may be diminishing in size, while the US soybean crop continues to enlarge, as projected by the USDA’s November Crop Report. With IL and IA losing 5 bushels from their estimated corn yields, the national average yield dropped slightly, but the national soybean yield grew with the help of higher yield prospects in IN. Only minor adjustments were made in the supply and demand balance sheets, but the reduction in the corn carryout helped raise the season average price by 20¢ per bushel. Globally, corn production, trade, and carryout will all be lower for the current marketing year. But global soybean production trade and carryout will all be higher for the new marketing year, helped by bigger yields in the US and more acreage in Brazil.