USDA’s January crop production report on Monday sent shockwaves through grain futures markets, particularly corn, as traders, farmers and economists struggled to come to grips with a surprise jump in yield and acres. Closer scrutiny of state-level data offers a roadmap to how the agency put together its national figures and what areas saw the biggest shifts.
Corn saw the most dramatic changes from the previous update. USDA data showed increases not only to national yield, but also a whopping 1.211 million acre increase to their harvested acreage estimate from November. Acreage and production increases were mainly concentrated in the western corn belt and northern Plains. Modest decreases occurred in the eastern corn belt in production, but not near enough to offset the changes in the rest of the country.
The chart below demonstrates just how much of an anomaly this shift was- with nothing comparable occurring in at least the last 20 years. While the chart shows this as a true outlier, a trend can be seen of USDA shifting acreage in recent years.
In a question-and-answer session on social-media platform X, a USDA official said more corn intended for silage going to harvest and lower abandonment rates accounted for part of the rise in harvested acres. The size of the shift was still perplexing. Declining survey response rates by farmers and a government shutdown mid-harvest are seen as possible complicating factors that may have contributed to the swing.
Soybeans faced saw a similar, but less bearish report. Harvested acres were increased 124,000 from the previous estimate and national yield was left unchanged, resulting in a 9 million bushel increase to production. Yields were shifted at state levels, but ultimately offset at the national level. Price action in the days after the report saw nearby beans retreat to their mid-October lows, the time right before a trade framework with China was announced.
Changes to soybean production were spotty geographically, but the largest increases were noted in Kentucky, Minnesota, and Kansas. The largest decreases were seen in Illinois and Iowa.
Cotton was one of the only commodities that did not have a fully bearish reaction to the data. Production was cut 360,000 bales in upland cotton, and increased 10,000 bales in Pima, resulting in a net decrease of 350,000 bales for all cotton from December. Major production cuts were seen across the lower Delta, pulling states in that region back from their previously forecasted record high yields.
However, acreage was increased significantly in Texas and Oklahoma, limiting the impact of cuts elsewhere. Higher than usual rainfall on dryland cotton was the main driver of lower than usual abandonment. Cotton may continue to see minor adjustments to production and yield as USDA’s final number for the crop is not released until May.
