Last season, it quickly became clear that the worst drought in five decades was going to cut yields dramatically.
This season, hope for a bin-busting crop persisted despite cool temperatures and a freak May snowstorm in the Corn Belt.
The recent “flash drought” hitting the Midwest has fueled dire predictions of lighter weight corn kernels and unfilled soybean pods. All farmers could do was “wait and see.” This week, in a series of monthly reports USDA pulled back the curtain just enough for everyone to get a closer look.
Despite persistent drought in many parts of the Grain Belt, government analysts actually increased estimates on 2013 corn production. According to the Agriculture Department, U.S. producers will harvest a record 13.84 billion bushels this fall. That’s up 80 million bushels from the August report. USDA pegs the national average corn yield at 155.3 bushels per acre, up more than 25 percent from last year’s drought-reduced crop.
Government bean counters, however, say there are fewer soybeans in America’s fields than previously believed. USDA now is calling for total U.S. production of 3.15 billion bushels… down 3 percent from last month’s estimate. The national average soybean yield is expected to decline to 41.2 bushels per acre reflecting a 1.4 bushel reduction from last month.
Since the Agriculture Department will release its Small Grains Summary at the end of the month, government analysts made few changes to their August estimates on wheat.
Total U.S. wheat production is estimated at 2.11 billion bushels on a national average yield of 46.2 bushels per acre -- virtually unchanged from July’s predictions.
Turning to its monthly supply and demand estimates, USDA lowered its domestic old-crop corn ending stocks by 8 percent. But the government predicts record production will result in new-crop ending stocks of 1.86 billion bushels.
Analyzed as a percentage of demand, the numbers add up to an ample domestic stocks-to-use ratio of 14.6 percent. If realized, that would be the highest corn stocks-to-use ratio in 8 years. However, strong demand is expected to support prices. And despite record anticipated production, USDA analysts reduced their season-average price estimates by only a dime from last month to $4.80 per bushel.
U.S. soybean ending stocks are predicted to fall more than 25 percent from last year to 125 million bushels.
An accompanying domestic soybean stocks-to-use ratio of 4.8 percent is tight by historical standards and leaves little room for production shortfalls. After factoring strong anticipated global demand, the Agriculture Department increased its average price estimates by more than a dollar from last month to $12.50 per bushel.
And the U.S wheat stocks-to-use-ratio is predicted to decline to 23 percent. While that would be the tightest supply in five years, it’s easily enough to meet domestic demand. And after considering estimates of increased global wheat production the figures prompted USDA to lower its season-average price estimate by a dime to $7.00 per bushel.