By Ben Potter
The U.S. Department of Agriculture and trade expectations aren’t aligned after all. Despite an average trade estimate of 168.2 bu. per acre (bpa) for corn yields and 49.1 bpa for soybean yields, USDA inched its production and yield forecasts even higher for its September "World Agricultural Supply & Demand Estimates" (WASDE) and "Crop Production" reports.
According to the September reports, corn yields are now estimated at 169.9 bpa, up from USDA's August estimate of 169.5 bpa. USDA corn production estimates also edged higher, from 14.153 billion bu. in August to 14.184 billion bu. in September.
State by state, expected corn yields haven’t uniformly improved, however. USDA projects increases from August in states like North Dakota (+3%), South Dakota (+5%), Oklahoma (+4%), Texas (+8%), Missouri (+1%), Illinois (+1%) and Ohio (+2%). USDA also decreased corn yield forecasts from August levels in states like Nebraska (-2%), Minnesota (-1%), Iowa (-1%), Indiana (-2%) and Michigan (-1%).
U.S. soybeans will capture the largest harvest on record, according to September USDA estimates. The crop won’t match the record per-acre yields of 2016, but more acres in 2017 will push the total production to an unprecedented 4.431 billion bu. -- higher than USDA’s August estimates of 4.381 billion bu. USDA is forecasting per-acre yields of 49.9 bu., up from 49.4 bu. in August.
USDA's state-by-state soybean yield projections were largely unchanged from August to September but did pop in areas such as North Dakota (+2%), South Dakota (+4%), Texas (+5%), Arkansas (+2%), Indiana (+1%) and Ohio (+1%). Yield projections declined in Nebraska (-2%), Minnesota (-2%), Michigan (-1%) and Pennsylvania (-1%).
World 2016-17 ending stocks finished a bit lower, according to the USDA numbers. August corn stocks were 228.61 million metric tons, and September's eased downward to 226.96 mmt. Soybeans fell from 96.98 mmt in August to 95.96 mmt in September.
For wheat, USDA estimates for U.S. and world ending stocks for 2017-18 did not move significantly but did remain above trade estimates. U.S. ending stocks were unchanged at 933 million bu., compared to the average trade expectation of 920 million bu. World stocks were down slightly, from 264.69 mmt in August to 263.14 mmt in September. The average trade estimate was 264.3 mmt.
The news put a damper on grain prices, throwing corn futures about 3% lower and soybean futures about 2% lower in trading immediately following the report. At midday trading, December corn had sunk 10.5 points to $3.47/bu., and November soybeans tumbled 15.75 cents to $9.4425/bu. Winter wheat was down about 3 cents, and spring wheat fell about 13 cents.
According to Farm Futures senior grain analyst Bryce Knorr, USDA didn’t make any huge changes, but it wasn’t enough to save the day.
“The adjustments USDA made were, by and large, bearish, and that was enough to topple a market leaning in the other direction,” he said. “While yield estimates rose for both corn and soybeans, the increases were fairly small. Still, some traders will believe this creates a ‘big crops get bigger scenario,’ though statistically, that isn’t true.”
Knorr added that some of the world numbers weren’t completely bearish, either.
“Soybean carryout for both the 2016 and 2017 crop marketing years was lowered globally,” he noted. “USDA confirmed ideas floating around in the trade that Brazil would sell down some of its inventory in the coming year, assuming only a modest increase in acreage and average yields. USDA also raised its forecast of Chinese imports of both old and new crop soybeans, and the U.S. will get some of that business for 2017 after record exports in the year just ended.”
Continued revisions are a part of the process, too – and there are at least two curveballs ready for the October reports that go by the names of Hurricane Harvey and Hurricane Irma. According to USDA, the full impact of Hurricane Harvey “may not be fully reflected in (the September) report.” That’s because data still were being collected for the September report when the storm hit. The effects of Hurricane Irma should be known in time for the October reports, the agency said.
The next rounds of the WASDE and "Crop Production" reports drop Oct. 12.