‘Outstanding’ conditions point to bumper crops, huge corn and soy stockpiles
U.S. farmers are looking at their largest corn crop ever and a near-record soybean harvest, with huge stockpiles of both crops persisting into fall 2021, said the USDA on Wednesday. Some 2.8 billion bushels of corn — a nearly 10-week supply — would remain in the bin when next year’s crop is mature, the largest carry-over since the Reagan era.
In its first forecast of the fall harvest, the USDA said record-high yields per acre would result in 15.278 billion bushels of corn and 4.425 billion bushels of soybeans. The forecasts were based on conditions on Aug. 1 and did not reflect the impact of the derecho — a sustained, intense rain and windstorm — that swept from eastern Nebraska through Iowa and into northern Illinois and northern Indiana on Monday. The governor of Iowa said that up to 10 million acres of cropland in the state were affected by the derecho.
If the USDA forecasts are correct, the corn crop would exceed the record 15.128 billion bushels of 2016, and soybeans would nearly match the record 4.428 billion-bushel mark of 2018.
Even with full-throttle consumption of corn and soybeans by livestock feeders, food companies, exporters, and industrial users such as biofuel makers, the corn stockpile at the end of the 2020/21 marketing year would be the largest since 4.259 billion bushels in 1988. The soybean carry-over would be 610 million bushels, only 5 million bushels smaller than the carry-over expected this Sept. 1. The record carry-over is 909 million bushels, in the wake of the 2018 record soybean crop.
“Many growing areas have had an outstanding season,” said economist Scott Irwin of the University of Illinois in discussing the USDA forecasts — “plenty of corn around for 2020.”
“We need a (economic) recovery,” said his colleague Todd Hubbs during a farmdoc Daily webinar, to winnow the corn stockpile. There is some skepticism that soybean yields will be as high as forecast, but if the USDA is correct, he said, “That’s a lot of beans out on the market.”
Futures prices for soybeans rose on Wednesday. Hubbs said traders were “discounting the yield (forecast) — that’s what I think.” Corn futures prices also were up. Jason Roose of U.S. Commodities said the USDA’s forecasts of world ending stocks for corn and soybeans were lower than expected and that “combined with the weaker dollar, that scenario could offset larger (U.S.) ending stocks.”
Farm gate prices for this year’s corn and soybean crops were forecast by the USDA to be the lowest since 2006/07.
Corn and soybeans are the two most widely planted crops in the country and are the foundation of much of U.S. food production. They are used in livestock rations and as ingredients in a variety of processed foods.
The USDA forecast a wheat crop of 1.84 billion bushels, down 5% from last year, and a cotton crop of 18.1 million bales weighing 480 pounds each, down 9% from 2019 despite record yields forecast at 938 pounds per acre. The coronavirus pandemic has reduced demand for wheat and cotton. Low market prices and abundant supplies are expected to boost corn and soybean use in the year ahead, said the USDA.
The USDA interviewed 23,000 farmers about their expected yields as part of developing its crop forecasts. The margin of error in August on the corn forecast is 6.2%, said the USDA, and for soybeans it’s 11.1%. In 11 of the past 20 years, its August corn estimate was larger than its final crop figure. The USDA’s August soybean estimate was smaller than the final crop figure in 16 of the past 20 years.
The Crop Production report is available here.
The World Agricultural Supply and Demand Estimates report is available here.