USDA throws the corn market a major curve ball yesterday by raising the yield estimate! What traders and producers have to realize is the fact the US is about to harvest a NEW All-Time Record Corn Crop...at least according to the USDA???
Reader write-in question of the day: "Tell me... how does the Iowa corn 'crop conditions' drop massively the past few weeks but the USDA only estimates a 1-yield drop in their production?"
All acreage left unchanged. USDA did not make any revisions to its planted or harvested acreage numbers yesterday. Thoughts are the revisions will come in the OCT report, once NASS has a chance to go over the data with the FSA.
Soybeans clearly appear to be the ONLY bull left in the ring right now. Lets recap what has taken place and what you need to recognize from the latest USDA numbers:
- Soy Yield lowered down to 41.2 bushels per acre vs. 42.6 last month vs. 44.5 previously. Yields are clearly tumbling, the question now is how far will they fall? Many sources talking possible yield numbers in the high-30's.
- Most ALL state yields lowered: OH yield -1% down to 49 bpa; IN -2 to -48%; NE "unchanged" at 47 bpa; IL down -1 to 46bpa; IA yield dropped -3 to 43 bpa; MI -2 to 43bpa; WI -2 to 40bpa; MN -2 to 39bpa; MO yield dropped -4% to 35bpa; ND -3 to 29bpa.
- Total production now projected at 3.149 billion bushels, down 106 million from last months 3.255 billion estimate.
- Demand balance sheet sees crush cut by 15 million bushels to 1.655 billion on lower meal exports and lower domestic meal consumption; Exports cut by 20 million bushels to 1.37 billion reflecting stiffer competition from South America and the drag from higher prices.
- Ending stocks are now projected at just 150 million bushels, down 70 million vs. last months 220 million estimate vs. 265 million the previous month.
- Stock/Use ratio now at just 4.04%. The tightest since 1964/65.
- Global soybean production left basically unchanged at a RECORD 281.7 million tons. Thoughts are larger crops in South America are offsetting reductions in the US, Canada, China and Russia.
- Brazil's soybean production is now forecast at a NEW record 88 million tons, up 3 million on a 4% increase in acreage. This is up 6 million metric tons from last year and over 21 million metric tons from the previous crop year.
- China soybean production is reduced 0.3 million tons to 12.2 million on lower yields resulting from excess rainfall and flooding in the northeast. If realized, this would be China’s smallest soybean harvest since 1992/93.
- Average on-farm price of soybeans raised by more than $1.00 per bushel, from a $10.35 - $12.30 range up to an $11.50 - $13.50 range.
*I should point out there is talk circulating that in each of the years USDA lowered their Sept soy yield by more than 1 bushel per acre (like yesterday's 1.4 bushel cut), they tend to lower the average yield again in the Oct report. In addition the final yield number tends to come in anywhere between 1.3 and 3.0 bushels per acre lower than the Sept estimate.
Corn bulls were highly disappointed by the USDA's decision to RAISE yields rather than lower. Below are a few of the more important takeaways and thoughts:
- NEW All-Time Record US Corn Crop Projected at 13.843 billion bushels vs. last months 13.763 billion. Essentially meaning domestic output will rise by 28%compared tot last years 10.78 billion bushels. Maybe even more burdensome is the fact Global Inventories are expected to jump by 24% to a NEW 12-year high.
- US Corn yield raised to 155.3 bpa (a jump of 0.9 bushels per acre) vs. the 154.4 yield estimate last month.
- States Showing Improvements: AR up +5 bushels to 175 bushels per acre; GA +2 to 183; KS +9 to 125; KY +4 to 158; LA +10 to 175; MS +5 to 170: NE +3 to 164; SC +3 to 127; SD +7 to 145; TN +6 to 152.
- States Declining: CO -2 bushel to 143 bpa; DE -5 to 160; IA -1 to 162 bpa; MO -5 to 125 bpa; ND -5 to 115; WI -1 to 143.
- States left Unchanged: AL left at 145 bushels per acre; CA 190; IL 165; IN 166; MD 155; MI 158; MN 166; NC 132; NJ 138; NY 150; OH 172; OK 115; PA 150; TX 138; VA 145; WA 215.
- Ear weight up 18% vs. last year. Ear count projected at at a record large 28,400 per acre.
- Demand estimates for new-crop left "unchanged." Old crop corn demand pushed higher by 60 million bushels. Feed/residual usage raised by 25 million bushels; Corn-for-ethanol use raised by 15 million bushels; Exports raised by 20 million bushels.
- Ending stocks are now projected at 1.855 billion bushels vs. the 1.837 billion forecast in August. after farmers harvest a record crop this year, the Department of Agriculture said.
- Corn prices are down a whopping 33% this year and 45% from a record price of $8.49 set back on Aug. 10, 2012.
- Average on-farm price of corn lowered by $0.10 cents per bushel to between $4.40 and $5.20.