Mother Nature continues to hold the cards in grain and oilseed markets.
Favorable conditions east of the Mississippi River prompted some discussion this week of record-breaking crops in some parts of the eastern Corn Belt.
But further west -- where cool and unusually wet weather delayed planting for weeks -- things are less certain.
While farmers have made significant progress, the full impact of persistent rainfall in key growing states like Iowa, Minnesota and Nebraska remains to be seen.
But that didn’t stop government “swamis” from gazing into the crystal ball this week. And in their latest Crop Production Report and Supply and Demand Estimates USDA analysts predicted America’s farmers will harvest record corn and soybean crops this fall.
U.S. farmers were able to plant nearly 90 percent of the nation’s corn over two weeks in May but weather delays have kept them from completing the job. With half of June gone, a scant 5 percent of the coarse grain remains unplanted.
USDA officials cut yield estimates slightly from last month to 156.5 bushels per acre. With nearly 98 million acres planted, production is expected to hit a record 14 billion bushels.
Some of the corn planting stalled by inclement weather has been replaced by soybeans. Those running hard to finish are still 30 percent behind last year.
Regardless of the possibility that farmers will end up planting more acres, officials left their guess for the 2013 soybean yield unchanged at a record 44.5 bushels per acre. The forecast sets the stage for a chart-topping harvest of 3.39 billion bushels.
And predictions for this years’ U.S. wheat harvest were increased 23 million bushels to just over 2 billion bushels. If realized, that would be 500 million bushels below last year’s record crop and well out of the top ten wheat harvests.
Turning to last year’s crop, corn sold for feed, ethanol and other uses is expected to result in tight ending stocks of 2 billion bushels. However, closer examination reveals the new crop stocks-to-use ratio is expected to be two-and-a-half times higher than last year.
That development has private analysts predicting new crop prices will be driven lower by as much as $2.50 dropping to an average price of $4.40 per bushel which lines up with official estimates. Debate over the actual amount of corn available is expected to keep prices volatile.
Globally, supplies are projected to be adequate as ending stocks for new crop corn were raised to more than 150 million metric tons.
Commodity traders viewed the report as bearish and new crop corn contracts fell more than 13 cents after the figures were released Wednesday.
After factoring in feed use, crush for oil, imports, and the moving target that is “soybean acreage” the projections for old crop soybean ending stocks remained unchanged at 125 million bushels. USDA officials say foreign buyers taking their time to switch over to South American suppliers resulted in larger stock piles.
The stocks-to-use ratio for the new crop is expected to be more than twice as much as last year’s which was the tightest in nearly a decade. Despite the prediction, private analysts are confident the crop will be able to meet projected demand and provide some cushion.
Public and private prognosticators viewed the new-crop numbers as bearish and predicted a jaw-dropping tumble of $4.40 per bushel to an average price of $9.75.
Globally, supplies are deemed adequate but some private analysts see little room for crop shortfall in the future.
USDA is expecting the South American crop to play heavily into what finally happens, but that’s predicated on estimates of record production in both continents. Also Chinese demand is expected to be a factor in price volatility.
The data woke the bears on LaSalle Street and the November contract fell 13 cents per bushel on the news.
USDA analysts increased their estimate for old crop domestic wheat supplies to 746 million bushels mostly due to decreased exports.
New crop supplies are tighter than in the past four years. Once food, seed and feed needs are handled the carryout is expected to be a 659 bushels.
The resulting stocks-to-use ratio for new crop wheat is expected to remain as tight as it has been for the past five seasons. Private analysts say domestic and world stocks are adequate even though supplies are failing to rebuild stocks like other grains.
USDA expects prices to strengthen by a dime to an average price of $6.90 per bushel -- 90 cents less than officials had initially predicted.
The market followed a downturn in new crop wheat from the previous day and prices declined by nearly 14 cents on the news.