By Michele F. Mihaljevich
WASHINGTON, D.C. – Last week, market analysts sifted through several USDA crop reports, which included some lowered numbers for 2020 production. Ending stocks for corn, soybeans and wheat were also reduced from December estimates.
The agency’s National Agricultural Statistics Service (NASS) released supply and demand, crop production, quarterly grain stocks and winter wheat seeding reports Jan. 12.
Prior to the 12th, market attention was focused on soybean ending stocks, as analysts were expecting a much tighter number than NASS estimated in December, said Todd Hultman, DTN lead analyst. Once the reports were released, the corn production number became the focus, he noted.
“Lots of times we tend to cross our fingers as we enter this January report because you know it’s one thing to expect the way conditions are in the real world and it’s another thing to expect sometimes what USDA might say and those two don’t always go together,” Hultman explained. “But in this case the surprise of the day, I think we can say, is the corn crop estimate for 2020.”
NASS estimated last year’s corn crop at 14.2 billion bushels, down from December’s 14.5 billion, but up 4 percent from 2019. Average yield was lowered from 175.8 bushels per acre in December to 172. In 2019, average yield was 167.5. Acres harvested for grain were up 1 percent from 2019, to 82.5 million.
“Now a lot of us know there were very dry weather conditions especially from about early August on, possibly that hit the crop more than was earlier expected,” Hultman said. “Anecdotally, as I talked to corn growers around the Midwest, a lot of them expected yields were going to come in less than they were looking at earlier in the summer but they thought they still did pretty well overall. Obviously there were some seriously dry areas, eastern Nebraska, west central Iowa, getting hit.”
Alan Brugler, a DTN contributing analyst, said the drop in corn yield was the largest November to January revision USDA has made in either direction going back to at least to 1974. NASS surveyed more than 77,000 producers for its December Ag Survey, which is three to four times the number they survey for the fall monthly crop reports, he noted. “That’s a lot more data points and they feel the farmer surveys are the most accurate data they get. That said, there must be some issues with the statistical models, satellite sensing and the FSA (Farm Service Agency) number integration in the fall surveys if this large of a correction is necessary.”
The yield was impacted by the August derecho, which caused damage to crops from Nebraska and South Dakota to Indiana, Brugler stated. A drought also impacted some areas of the Corn Belt, he added.
Last year’s soybean crop was also cut by NASS, dropping from 4.17 billion bushels in December to 4.14 billion in January. The January figure is up 16 percent from 2019. Yield was adjusted to 50.2 bushels, down from December’s 50.7. Harvested acres – at 82.3 million – were up 10 percent from 2019.
Soybean ending stocks were 140 million bushels in the latest report, down from 175 million. NASS upped the nation’s import estimate from 15 million bushels in December to 35 million. “In other words, U.S. soybean supplies are getting so tight that, yes, we’re probably going to have to import soybeans this summer, even if Brazil has the big crop that they’re looking for,” Hultman said. “Our demand has just been too strong, mostly lead by exports but also by crush.”
Corn ending stocks were nearly 1.6 billion bushels, down from 1.7 billion in December. Wheat ending stocks fell from 862 million bushels in December to 836 million. Corn and wheat ending stocks were below the average pre-report estimate; soybeans were slightly higher.
The markets were immediately higher after the reports were released, said Matthew Kruse, president of CommStock Investments. “There’s a lot of fireworks in the markets today,” he said. “They continued to erode ending stocks in the three main commodities that we follow: corn, beans and wheat.”
Soybean stocks as of Dec. 1, 2020, totaled 2.9 billion bushels, down from nearly 4.7 billion last fall. Elaine Kub, a DTN contributing analyst, said the soybeans went through processing facilities and “then down the gullets of the nation’s 230 million turkeys, 390 million egg-laying hens and approximately 800 million broilers being fed to maturity on any given day. Or the meal went down some of the throats of our 9.38 million milk cows or 77.5 million hogs. Or the whole, unprocessed soybeans left the country on trains bound for Mexico or on massive ships bound for China, Egypt and elsewhere in Asia and South America.”
Corn stocks as of Dec. 1 were 11.3 billion bushels, down slightly from the year before. Wheat stocks totaled 1.7 billion, down 9 percent.
NASS raised average farm prices from December estimates – corn, $4.20, up from $4; soybeans, $11.15, up from $10.55; and wheat, $4.85, up from $4.70.
Winter wheat update
Winter wheat acreage nationwide was projected to be 32 million, up 5 percent from last year. The number is the fourth lowest U.S. acreage on record, NASS said. Farmers seeded 22.3 million acres of hard red winter, 6.23 million of soft red winter and 3.48 million of white winter.
NASS estimated Illinois at 630,000 acres, up from 570,000; Indiana, 400,000, up from 300,000; Kentucky, 500,000, down from 510,000; Michigan, 580,000, up from 490,000; Ohio, 500,000, down from 530,000; and Tennessee, 400,000, up from 300,000. The agency stopped estimating Iowa’s acreage in 2019. Kansas is expected to plant the most wheat nationwide with 7.3 million acres, up from 6.6 million.