PF Reaction: USDA Unexpectedly Raises U.S. Corn Yield & Production

Posted on 09/12/2018 12:24 PM

Market reaction

Ahead of USDA's report, corn futures were trading 1 to 2 cents lower, soybeans are mostly 2 to 3 cents lower, wheat futures are mostly 4 to 7 cents higher and cotton futures were mostly 10 to 30 points lower.

In reaction to the reports, corn futures are trading mostly 14 to 15 cents lower, soybeans are around a penny higher, wheat futures are mostly 10 to 20 cents lower and cotton futures are roughly 90 points lower.

 

Crop production

Corn: 14.827 billion bu.; trade expected 14.529 billion bu.
— compares to 14.586 billion bu. in August; 14.604 billion bu. in 2017
Beans: 4.693 billion bu.; trade expected 4.649 billion bu.
— compares to 4.586 billion bu. in August; 4.392 billion bu. in 2017
Cotton: 19.682 million bales; trade expected 19.12 million bales
— compares to 19.235 million bales in August; 20.92 million bales in 2017


USDA surprised the market again by raising its corn crop and yield estimates from last month, whereas traders anticipated lower forecasts. USDA’s crop estimate came in 298 million bu. above the average pre-report estimate and 241 million bu. higher than originally estimated in August. The national average yield estimate increased 2.9 bu. from last month to a record 181.3 bu. per acre. That’s 3.5 bu. higher than the average pre-report estimate.

Record corn yields are expected in 12 states – Alabama, Illinois, Indiana, Iowa, Maryland, Michigan, Nebraska, New York, Ohio, South Dakota, Tennessee and Wisconsin. USDA’s objective yield data showed an increase in ears per acre and the implied ear weight from last month. Ear counts are record-large in the 10 objective sample states and the implied ear weight would also be the highest ever. USDA made no adjustments to harvested corn acres. It will incorporate FSA certified acreage data in October.

Corn yields are estimated higher than last month in Illinois (up 7 bu. to 214 bu. per acre), Indiana (up 6 bu. to 192 bu. per acre), Iowa (up 4 bu. to 206 bu. per acre), Kansas (up 2 bu. to 131 bu. per acre), Michigan (up 7 bu. to 165 bu. per acre), Missouri (up 7 bu. to 138 bu. per acre), Nebraska (up 2 bu. to 198 bu. per acre), Ohio (up 8 bu. to 188 bu. per acre), South Dakota (up 3 bu. to 173 bu. per acre) and Wisconsin (up 2 bu. to 179 bu. per acre). USDA kept its yield estimate unchanged in Minnesota (191 bu. per acre). The only major production state USDA estimates a lower yield than August was North Dakota (down 6 bu. to 142 bu. per acre).

USDA’s second survey-based soybean crop estimate was 44 million bu. higher than the average pre-report trade estimate and up 107 million bu. from last month. The national average yield estimate of 52.8 bu. per acre is up 1.2 bu. from August and 0.6 bu. higher than anticipated. Record yields are expected in 10 states – Illinois, Indiana, Iowa, Kentucky, Mississippi, Nebraska, New York, Ohio, Pennsylvania and Tennessee. USDA’s field data showed the fourth highest pod count on record in the 11 objective sample states, but a record implied pod weight. USDA made no adjustments to harvested soybean acres. It will incorporate FSA certified acreage data in October.

In the major production states, soybean yields are estimated higher than last month in Illinois (up 2 bu. to 66 bu. per acre), Indiana (up 2 bu. to 60 bu. per acre), Iowa (up 1 bu. to 60 bu. per acre), Kansas (up 5 bu. to 41 bu. per acre), Michigan (up 3 bu. to 49 bu. per acre), Minnesota (up 1 bu. to 50 bu. per acre), Missouri (up 2 bu. to 47 bu. per acre), Nebraska (up 1 bu. to 62 bu. per acre) and Ohio (up 2 bu. to 58 bu. per acre). USDA held yields steady in Arkansas (50 bu. per acre), South Dakota (49 bu. per acre) and Wisconsin (50 bu. per acre). The only major production state with a lower yield estimate than last month is North Dakota (down 2 bu. to 36 bu. per acre).

USDA’s cotton crop estimate was 562,000 bales higher than anticipated and 447,000 bales higher than last month. The national average yield of 895 lbs. per acre is down 16 lbs. from August. USDA increased harvested cotton acreage by 415,000 acres from last month, as it incorporated initial FSA acreage data. Estimated yields were lowered 32 lbs. per acre in Texas and 21 lbs. per acre in Georgia.

 

U.S. carryover

Corn: 2.002 billion bu. for 2017-18; down from 2.027 billion bu. in August
— 1.774 billion bu. for 2018-19; up from 1.684 billion bu. in August
Beans: 395 million bu. for 2017-18; down from 430 million bu. in August
— 845 million bu. for 2018-19; up from 785 million bu. in August
Wheat: 935 million bu. for 2018-19; unch. from 935 million bu. in August
Cotton: 4.3 million bales for 2017-18; down from 4.4 million bales in August
— 4.7 million bales for 2018-19; up from 4.6 million bales in August

On the old-crop corn balance sheet, the only change was a 25-million-bu. increase to exports, which are now estimated at 2.425 billion bushels. USDA’s national average on-farm cash price of $3.40 is unchanged from the midpoint of last month’s range.

On the new-crop corn table, USDA increased total supplies by 215 million bu. as a result of the bigger crop and smaller beginning stocks. On the demand side, USDA increased feed and residual use 50 million bu. (to 5.575 billion bu.), food seed and industrial use 25 million bu. (to 7.13 billion bu., with all of that going to ethanol grind, which is now estimated at 5.65 billion bu.) and exports 50 million bushels (to 2.4 billion bu.). USDA lowered the national average on-farm cash new-crop corn price by a dime on both ends of the range from last month to $3.00 to $4.00.

On the old-crop soybean balance sheet, USDA increased total use by 35 million bu., with estimated crush up 15 million bu. (to 2.055 billion bu.) and exports up 20 million bushels (to 2.130 billion bu.).  USDA left its national average on-farm cash old-crop soybean price at $9.35.

On the new-crop soybean balance sheet, USDA raised total supplies by 73 million bu. from last month. The bigger crop estimate was partially offset by lower beginning stocks. On the demand side, projected crush was increased 10 million bu. (to 2.07 billion bu.) and residual “use” was increased 1 million bushels (to 34 million bu.). USDA now projects the national average on-farm cash new-crop soybean price at $7.35 to $9.85, down 30 cents on both ends of the range from last month.

USDA made no changes to the supply or demand side of its 2018-19 wheat balance sheet this month. USDA now estimates the season-average on-farm cash price at $4.70 to $5.50, up a dime on the bottom end and down a dime on the top end from last month.

On the 2017-18 cotton balance sheet, USDA lowered domestic use by 20,000 bales from last month, while unaccounted use was increased 120,000 bales. USDA left its national-average on-farm old-crop cash cotton price at 68 cents.

On the new-crop cotton balance sheet, the bigger crop estimate was partially offset by lower beginning stocks. Total supplies are projected up 350,000 bales from last month. On the demand side, projected exports are up 200,000 bales (to 15.7 million bales) and unaccounted use is up 50,000 bales (to 190,000 bales). USDA’s national average on-farm new-crop cotton price forecast at 70.0 cents to 80.0 cents is unchanged from August.

 

Global carryover

Corn: 194.15 MMT for 2017-18; up from 193.33 MMT in August
— 157.03 MMT for 2018-19; up from 155.49 MMT in August
Beans: 94.74 MMT for 2017-18; down from 95.61 MMT in August
— 108.26 MMT for 2018-19; up from 105.94 MMT in August
Wheat: 274.36 MMT for 2017-18; up from 273.07 MMT in August
— 261.29 MMT for 2018-19; up from 258.96 MMT in August
Cotton: 83.79 million bales for 2017-18; down from 84.51 million bales in August
— 77.46 million bales in 2018-19; ??? up 77.10 million bales in August

 

Global production highlights

Argentina beans: 37.8 MMT for 2017-18; compares to 37.0 MMT in August
— 57.0 MMT for 2018-19; compares to 57.0 MMT in August
Brazil beans: 119.5 MMT for 2017-18; compares to 119.5 MMT in August
— 120.5 MMT in 2018-19; compares to 120.5 MMT in August
Argentina wheat: 18.0 MMT for 2017-18; compares to 18.0 MMT in August
— 19.5 MMT in 2018-19; compares to 19.5 MMT in August
Australia wheat: 21.3 MMT for 2017-18; compares to 21.3 MMT in August
— 20.0 MMT in 2018-19; compares to 22.0 MMT in August
China wheat: 129.77 MMT for 2017-18; compares to 129.77 MMT in August
— 128.0 MMT in 2018-19; compares to 128.0 MMT in August
Canada wheat: 29.98 MMT for 2017-18; compares to 30.0 MMT in August
— 31.5 MMT in 2018-19; compares to 32.5 MMT in August
EU wheat: 151.68 MMT for 2017-18; compares to 151.68 MMT in August
— 137.5 MMT for 2018-19; compares to 137.5 MMT in August
Russia wheat: 84.99 MMT for 2017-18; compares to 84.99 MMT in August
— 71.0 MMT for 2018-19; compares to 68.0 MMT in August
Ukraine wheat: 26.98 MMT for 2017-18; compares to 26.98 MMT in August
— 25.5 MMT for 2018-19; compares to 25.5 MMT in August
China corn: 215.89 MMT for 2017-18; compares to 215.89 MMT in August
— 225.0 MMT for 2018-19; compares to 225.0 MMT in August
Argentina corn: 32.0 MMT for 2017-18; compares to 33.0 MMT in August
— 41.0 MMT for 2018-19; compares to 41.0 MMT in August
South Africa corn: 13.8 MMT for 2017-18; compares to 13.8 MMT in August
— 13.0 MMT for 2018-19; compares to 13.5 MMT in August
Brazil corn: 82.0 MMT for 2017-18; compares to 83.0 MMT in August
— 94.5 MMT for 2018-19; compares to 94.5 MMT in August
China cotton: 27.5 million bales for 2017-18; compares to 27.5 million bales in August
— 27.5 million bales for 2018-19; compares to 26.5 MMT in August

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