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USDA reduces corn yield estimate

Corn

The latest crop production estimate for corn called for less production in the U.S. than the previous estimate and that had the market react in a positive way.

U.S. corn production is now estimated at 13.9 billion bushels, down 3 percent from its August forecast. That’s also down 8 percent from 2021 corn production. Based on conditions as of Sept. 1, yields are expected to average 172.5 bushels per harvested acre, down 2.9 bushels from the previous forecast and down 4.5 bushels from last year.

“The corn market has already assumed that there will be a cut in yields,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn. “We know that we don’t have a bumper corn crop out there. Remember, it’s not the change from month to month, it’s the expectation, so the market has already said ‘we know we don’t have a huge corn crop, we’ve already priced that in,’ and so we know that there’s problems. That’s why we have corn futures that rallied 20 cents last week. We know that there’s problems with the corn market.”

Also in its Sept. 12 report, USDA updated acreage estimates in several states based on a thorough review of all available data. USDA’s report now estimates total planted area at 88.6 million acres, down 1 percent from the previous estimate and down 5 percent from last year. Area harvested for grain is now forecast at 80.8 million acres, down 1 percent from the previous forecast and down 5 percent from 2021.

Crop condition ratings have stabilized, but corn yields will be lower than estimated earlier.

“The number that we thought we were going to have at the beginning of the year, we’re going to be a few bushels off of that,” she said. “But, we have good demand and we kind of needed a big corn crop, and we’re not going to have it this year, which is why we have futures at $6.80, too.”

Prior to the report’s release, Jensen pointed out that local prices for corn were “okay,” with corn delivered off the combine at about $6.35. Futures were $6.80 for December, she added, so not quite to the $7 range.

“Prices are still pretty darn respectable. I know that it would have been nice to get more sold at $7 or over like we had this summer, but $6.80 futures is pretty darn close to $7,” she said.

That’s a positive to growers in the Northern Plains who got their corn planted later than usual and there were concerns of whether the crop would mature. And there were a lot of questionable corn yields.

“But, if you have more confidence in your corn, selling futures at $6.80 is really nothing to be disappointed about,” she said.

At one local elevator in west central Minnesota regularly followed in this column, as of Sept. 12, September cash corn prices were listed at $6.90 and basis was -5 cents under. The December 2022 corn futures prices were listed at $6.96 and basis was +11 cents over.

Another issue with corn and USDA is that USDA is no longer releasing weekly export sales information because it’s having computer problems. That’s a challenge more so for soybeans because it depends more on export sales, but it’s also a concern for corn.

“We have a strong U.S. dollar right now, that’s something we haven’t had to deal with for quite a while, and we sell lots of corn to lots of people…not like soybeans where it all goes to China, we have many buyers for corn…but our dollar has just strengthened so much, which does make our corn more expensive,” she said. “So, just like the soybean market, we are concerned about export sales in corn.”

Jensen said the U.S. also needs strong domestic demand for corn, as well, and that includes ethanol.

“Demand for ethanol is slowing down along with gasoline demand,” she said. “When you have high gas prices you do ration demand a little bit, but we do have to make sure we’re getting ethanol into the mix, as well.”

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