The greatly anticipated August “Crop Production” report contained a larger-than-expected production forecast for the 2019 U.S. corn crop. Soybean production came in less on smaller acreage.
For corn the U.S. Department of Agriculture reduced harvested acres to 82 million acres; that is more than the expectations of 80 million acres. Corn-planted acreage totaled 90 million acres. When combined with a USDA’s Farm Service Agency projection of 11.2 million acres of prevent-plant corn, the total corn base appears to exceed 101 million acres in 2019.
The U.S. corn-yield forecast of 169.5 bushels per acre exceeded trade expectations by 4.6 bushels. The projected corn crop is 700 million bushels larger than the average trade guess at 13.9 billion bushels. As expected, due to poor crop-condition ratings, the eastern Corn Belt yield projections came in at worse levels than the previous year.
- Illinois is forecast at 181 bushels per acre.
- Ohio is forecast at 160 bushels per acre.
- Indiana is forecast at 166 bushels per acre.
Those corn-yield forecasts currently sit at more than 20 bushels per acre less than in 2018. Current field conditions in many areas indicate the yield projection may not see growth as we move toward harvest. In the past 10 years USDA’s August yield forecast came in at less than and more than the final yield estimate five times each.
Old-crop year-ending stocks estimate came in at 2.36 billion bushels, which is an increase of 20 million bushels from the July estimate. Ethanol use decreased 25 million bushels on weaker production levels. Corn exports continue to show weakness and may not reach the current projection of 2.1 billion bushels. Feed and residual use remains uncertain, with 681 million bushels necessary to meet the projection of 5.275 billion bushels. An expectation of ending stocks for the current marketing year at more than the present projection is reasonable at this point based on recent consumption trends.
For the 2019-2020 marketing year, the USDA decreased corn for ethanol use by 25 million bushels and exports by 100 million bushels. The forecast for 2019-2020 ending stocks sits at 2.181 billion bushels, an increase of 170 million bushels. The average farm price for the year ahead came in at $3.60, a decrease of 10 cents from the July report. Given the current production uncertainty, an expectation of lower ending stocks for the next marketing year seems prudent. The potential for reduced yield appears acute, particularly in the eastern Corn Belt.
The soybean-crop forecast of 3.68 billion bushels is 120 million bushels less than the average trade guess. Soybean-planted acreage totaled 76.7 million acres, a decrease of 3.34 million acres from the previous year. Harvested acreage came in at 75.9 million acres, with an estimated 4.35 million prevent-plant acres. The U.S. average soybean-yield forecast of 48.5 bushels showed no change from the July forecast.
Yield forecasts in many states across the Corn Belt reflected the poor growing conditions this summer. Yield forecasts in Iowa at 55 bushels per acre came in 2 bushels per acre less than the previous year. Yield forecasts in Illinois at 55 bushels per acre came in 10 bushels per acre less than from the previous year. States in the mid-South region showed some excellent soybean-yield projections.
During the past decade, the USDA August yield forecast has been less than the final national soybean-yield estimate only two times. The USDA has not produced an August soybean-yield forecast of more than 1 bushel more than the final soybean yield since 2003, when it came in 6 bushels more than the final yield.
For old-crop soybeans the USDA decreased the soybean-crush projection by 20 million bushels to 2.065 billion bushels, and maintained exports at 1.7 billion bushels. The pace of domestic crush and exports currently suggests those projections will hold for this marketing year. The forecast for ending stocks during the current marketing year increased by 20 million bushels to 1.07 billion bushels.
Forecasts for the 2019-2020 marketing year decreased ending stocks by 104 million bushels on the reduced production levels. The forecast for domestic soybean crush increased 15 million bushels to 2.06 billion bushels. Soybean-export forecasts decreased by 100 million bushels, reflecting recent development in trade negotiations and export-sales pace. The forecast for the marketing-year average price stayed at $8.40 per bushel.
The potential for soybean consumption less than current USDA forecasts remains linked to trade issues during the next year. Soybean exports will depend on continued growth in soybean exports to non-Chinese sources. The potential for South American soybean production to come in 150 million bushels larger than the previous crop seems likely. Combining the current soybean production levels in the United States with continuing trade issues, average farm prices for soybeans appear set for continued weakness in the 2019-2020 marketing year.
The USDA corn- and soybean-production forecasts will be updated Sept. 12. Uncertainty remains for U.S. corn and soybean supply this year. Prices will reflect crop-production potential with a strong emphasis on yield as we move into the harvest period.