FOCUS ON AG: AUGUST 10 USDA REPORT SURPRISES EXPERTS

By Kent Thiesse, Farm Management Analyst and Vice President, MinnStar Bank

Mankato Times

There was a lot of anticipation leading into August 10 USDA Crop Report, due to weather concerns that existed in many of the primary corn and soybean production areas in the United States. Parts of Illinois, Indiana, and the Eastern Corn Belt dealt with very wet conditions and late planting this Spring, and portions of North and South Dakota have been experiencing a major drought during the past couple of months. There has also been a growing dry weather pattern in western Iowa and Nebraska in recent weeks, which has caused some grain marketing analysts to lower their 2017 corn and yield prospects; however, based on crop conditions on August 1st, USDA apparently does not agree with that analysis of U.S. crop conditions. 

The USDA Crop Report issued on August 10 estimated the 2017 total U.S. corn production at 14.15 billion bushels, which would be a decrease of 7 percent from the 2016 record U.S. corn production of 15.2 billion bushels. The 2017 projected U.S. corn production would be the third highest on record, and would compare to corn production levels of 14.2 billion bushels in 2014, and 13.9 billion bushels in 2013. USDA is estimating 2017 total harvested corn acreage in the U.S. at 83.5 million acres, which is unchanged from June USDA estimates, but is down 4 percent from the 2016 harvested corn acres of 86.7 million acres, and is slightly above the 83.1 million harvested acres in 2014.

The August 10 Crop Report projects the 2017 national average corn yield at 169.5 bushels per acre, which is a decline of 5.1 bushels from the record U.S. average corn yield of 174.6 bushels per acre in 2016, The estimated 2017 U.S. corn yield also trails the average corn yield of 171.0 bushels per acre in 2014, but is slightly higher than the 2015 average yield was 168.4 bushels per acre. The USDA projected average corn yield for 2017 was higher than the highest average yield estimate by any of the grain marketing analysts, who had an average estimated U.S. corn yield of 166 bushels per acre.

USDA is estimating Minnesota’s 2017 average corn yield at 183 bushels per acre, which is 10 bushels below the record State average corn yield of 193 bushels per acre in 2015. Other recent State average corn yields are 188 bushels per acre in 2015, 158 bushels per acre in 2014, and 160 bushels per acre in 2013. USDA is now projecting Iowa’s 2017 average corn yield at the record level of 188 bushels per acre, which is well below last year’s record State average corn yield of 203 bushels per acre. Other recent average corn yields in Iowa are 192 bushels per acre in 2015, 178 bushels per acre in 2014, and 165 bushels per acre in 2013.

The 2017 USDA corn yield estimates for the other major corn producing States are Illinois at 188 bushels per acre, compared to 197 bushels per acre in 2016; Indiana at 173 bushels per acre, which is the same as 2016; and Nebraska at 183 bushels per acre, compared to 178 bushels per acre in 2016. South Dakota’s corn yield is estimated at 140 bushels per acre, compared to 161 bushels per acre in 2016, with North Dakota at 121 bushels per acre, compared to 158 bushels per acre in 2016.

The USDA Report on August 10 estimated total 2017 U.S. soybean production at a record level of 4.38 billion bushels, which would be slightly above the previous record U.S. soybean production of 4.31 bushels in 2016. USDA is now estimating total 2017 harvested soybean acreage at a record level of 88.7 million acres, which is up 7 percent from 82.7 million acres in 2016. Some experts feel that this number could be increased in future months, due to the prevented planted acres and drown-out acres in portions of the Eastern Corn Belt.

USDA projected the 2017 U.S. average soybean yield at 49.4 bushels per acre, which again surprised the grain trading experts, who had projected the 2017 average soybean yield closer to 47.5 bushels per acre. The 2017 estimated soybean yield compares to the record national average soybean yield of 52.1 bushels per acre in 2016, 48.0 bushels per acre in 2015, and 47.5 bushels per acre in 2014. Minnesota’s 2017 average soybean yield is estimated at 49 bushels per acre, which compares to the record State soybean yield of 52.5 bushels per acre in 2016. Iowa is projected to have a soybean yield of 56 bushels per acre in 2017, well below last year’s State record soybean yield of 60.5 bushels per acre.

Other projected 2017 yields in major soybean producing States include Illinois at 58 bushels per acre, compared to 59 bushels per acre in 2016; Indiana at 55 bushels per acre, compared to 57.5 bushels per acre in 2016; and Nebraska at 58 bushels per acre, compared to 61 bushels per acre in 2016. South Dakota is projected to have a 2016 soybean yield of 41 bushels per acre, compared to 49.5 bushels per acre in 2016, and the 2017 North Dakota soybean yield is estimated at 33 bushels per acre, compared to 41.5 bushels per acre in 2016. North and South Dakota combined are estimated to have 12.5 million acres of soybeans harvested in 2017, which compares to 8.1 million acres in Minnesota and 9.9 million acres in Iowa.

AUGUST 10 WASDE REPORT

The updated USDA World Supply and Demand Estimates (WASDE) were also released on August 10, which included the 2017 estimated U.S. corn production of 14.15 billion bushels, showed a slight reduction in the 2017-18 corn ending stocks, compared to the July estimate. The Report showed a slight decrease in expected corn usage for feed, ethanol, and exports in 2017-18, and resulted in projected corn ending stocks of 2.27 billion bushels. This would be a slight reduction from the estimated 2016-17 corn ending stocks of 2.37 billion bushels. By comparison, corn ending stocks were near 1.7 billion at the end of the 2015-16 marketing year. 

USDA is projecting an average on-farm corn price for the 2017-18 marketing year, which runs from September 1, 2017, through August 31, 2018, in a range of $2.90 to $3.70 per bushel, with an average expected price of $3.30 per bushel. The August estimated average 2017-18 corn price is the same as the July price estimates. The 2016-17 national average corn price, which will be finalized on September 30, 2017, is now estimated at $3.35 per bushel, which compares to national average prices of $3.61 per bushel for 2015-15, $3.70 per bushel for 2014-15, and $4.45 per bushel for 2013-14.

The recent WASDE estimates are projecting a large U.S. soybean production of over 4.38 billion bushels in 2017, with some increases expected in the soybean crush and exports in the coming year. This would result in estimated 2017-18 soybean ending stocks at 475 million bushels, which would be at the highest level in decades. USDA is estimating 2016-17 soybean ending stocks at 370 million bushels, which compares to the 2015-16 ending stocks of 255 million bushels.

USDA is now projecting an average on-farm soybean price for the 2017-18 marketing year in a range of $8.45 to $10.15 per bushel, with an average expected price of $9.30 per bushel. The August estimated 2017-18 soybean price was lowered by $.15 per bushel from the July estimate.  The 2016-17 final national average soybean price is estimated at $9.50 per bushel, which compares to 12-month national average prices of $8.95 per bushel in 2015-16, $10.10 per bushel in 2014-15, and $13.00 per bushel for 2013-14.

Focus on AG is a weekly Column which features timely information on crop and livestock production, farm management and marketing ag policy, renewable energy, and other timely ag Topics. For additional information contact Kent Thiesse, Farm Management Analyst and Vice President, MinnStar Bank, Lake Crystal, MN. Phone 507-381-960; E-Mail  kent.thiesse@minnstarbank.com Web Site http://www.minnstarbank.com

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