Corn Yields Higher Despite Warm Weather

The USDA surprised analysts with an increase in average corn yields to 155.3 bushels per acre, increasing the ending stocks-to-use ratio slightly to 14.6%. The 2013 corn crop is expected to be the largest on record in the U.S. Soybean production was lowered by 3% as dry weather has stressed the crop through the month of August and into the beginning of September. The USDA forecasts 2013/14 soybean ending stocks at 150 million bushels, putting the ending stocks-to-use ratio at 4.8%.

Corn

The USDA forecasted 2013/14 U.S. corn production 80 million bushels higher to a record 13.8 billion bushels. The corn yield forecast for this year was increased by 0.9 bushels per acre to 155.3 bushels per acre, surprising analysts who were expecting a roughly one bushel decrease in yield due to the warm weather over the last month. Increased yields in the Central Plains and the South more than offset the decreased yield in Iowa (the largest corn producing state in the U.S.) and North Dakota.

U.S. ending corn stocks for 2013/14 were increased by 18 million bushels, to 1.855 million, due to the increase in average yield. The season average corn price for 2013/14 was decreased 10 cents at both ends of the range to $4.40 to $5.20. Global course grain supplies for 2013/14 was decreased by 0.5 million tons mainly due to lower foreign production.

Corn use for the 2012/13 marketing year was increased by 55 million bushels. Ethanol use was increased by 15 million bushels due to stronger than expected August ethanol production. Exports for 2012/13 were raised by 20 million bushels due to higher August grain inspections. 2012/13 estimated feed and residual use was increased by 25 million bushels due to the later availability of the new crop corn.

Soybeans

U.S. average soybean yields in 2013/14 were decreased by 1.4 bushels per acre from last month, to 41.2 bushels, due mainly to weaker production in the western Corn Belt. Production for the 2013/14 year was decreased by 106 million bushels to 3.149 billion bushels.

Ending stocks for soybeans in the 2013/14 marketing year were lowered by 70 million bushels, to 150 million. Exports were also lowered, by 15 million bushels, due to increased competition from South America. The projected season average price range for 2013/14 was $11.50 to $13.50 per bushel, an increase of $1.15 on both ends of the range.

Soybean imports for the 2012/13 marketing year were increased by 5 million bushels to a record 40 million bushels.

Wheat

U.S. wheat supplies for 2013/14 were increased by 10 million bushels due to a higher than expected wheat crop from our neighbors to the north, Canada. Ending stocks for 2013/14 were increased from 551 million bushels to 561 million. The season average wheat price for 2013/14 was estimated at $6.50 to $7.50 per bushel, narrowed by 10 cents on each end of the range.

Global wheat supplies for 2013/14 were increased by 3.0 million tons due to record production. It is estimated that world production of wheat will produce a record 708.9 million tons, an increase of 3.5 million from last month.

Outlook

The USDA miraculously increased U.S. corn yield and production; Monsanto must be selling a hybrid corn seed that is invisible to early planting, short growing season, and dry temperatures during the crucial growing stages of a plant. The USDA has also redefined statistical reporting and Darin Newsome, senior analyst at DTN, points out a few changes they have made:

1. USDA does not have to change planted acres to account for prevented plantings.

2. USDA does not use its own (NASS) weekly crop condition numbers when calculating potential yield changes.

3. USDA does have to maintain certain levels of ending stocks and ending stocks-to-use in an attempt to control market chaos.