Crop forecasts smaller than expected
The USDA's August Crop Production report contained smaller than expected forecasts of the size of the 2013 U.S. corn and soybean crops. At 13.763 billion bushels, the corn crop forecast is 242 million bushels smaller than the average trade guess. At 3.255 billion bushels, the soybean crop forecast is 81 million bushels smaller than the average trade guess.
The forecast of corn area to be harvested for grain was unchanged from the June forecast of 89.135 million acres, but the average yield forecast of 154.4 bushels was 3.3 bushels lower than expected. Some of the larger yield forecast surprises were for Illinois and Indiana, where forecasts of 165 and 166 bushels, respectively, are well below the record yields anticipated based on generally favorable weather and high crop condition ratings. In contrast, the yield forecasts of 166 bushels for Minnesota and 163 bushels for Iowa are much higher than anticipated based on extensive planting delays and relatively low crop-condition ratings.
The inventory of old-crop corn on hand at the beginning of the 2013-14 marketing year on September 1 is forecast at 719 million bushels, down 10 million bushels from last month's projection. Corn exports have staged a small late-summer rally and will be marginally larger than earlier forecast for the 2012-13 marketing year. For the upcoming marketing year, the USDA lowered the projection of feed and residual use by 50 million bushels, reflecting expectations of less residual use with a smaller crop forecast. The projection of exports was reduced by 25 million bushels, reflecting larger production and export forecasts for the Ukraine. The projection of corn used for ethanol production was unchanged at 4.9 billion bushels, implying little growth in consumption of ethanol blends above 10% during the year ahead. Stocks at the end of the 2013-14 marketing year are projected at 1.837 billion bushels, 122 million less than projected last month. The marketing year average farm price is projected in a range of $4.50 to $5.30, 10 cents higher than projected last month.
The estimate of area planted to soybeans was reduced by 550,000 acres from the June forecast, with most of the reduction coming in Kansas, Minnesota, North Carolina, and South Dakota. The U.S average soybean yield is forecast at 42.6 bushels, about 1 bushel below the average trade guess. The yield forecast of 47 bushels for Illinois was surprisingly low while the forecast of 46 bushels for Iowa was larger than generally expected. The forecast of the inventory of old-crop soybeans at the beginning of the 2013-14 marketing year on September 1 was unchanged from last month's projection of 125 million bushels. However, the forecast of the domestic crush during the year ending this month was increased by 25 million bushels, the forecast of imports was increased by 10 million bushels, and the forecast of exports was reduced by 15 million bushels. With just over three weeks left in the 2012-13 marketing year, it appears that exports will be slightly larger than the revised forecast.