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USDA Takes Another Swing at Corn Yield, Acreage Estimates Thursday
DES MOINES, Iowa -- With the U.S. corn and soybean crops stumbling to the growing season’s finish line following a rough start to the season, the USDA has its work cut out Thursday updating yield and production estimates.
On Thursday, the USDA will release its September Supply/Demand Report and its Crop Production Report at 11 a.m. CDT.
Delayed Crop Growth
As of Sunday, there were over 9 million acres of corn that have not hit the dough-growth development stage. That still leaves two more stages (dent and black layer) that the late-planted corn has yet to reach.
There are over 6 million acres of soybeans that have not started setting pods, a new national record for this time of the year. The seed-fill and maturity stages follow setting pods.
More specifically, the USDA reported Monday that 10% of Illinois soybeans had not set pods, as well as 16% of Indiana, 11% of Kansas, 11% of Michigan, 16% of Missouri, 11% of Ohio, and 15% of Wisconsin.
It’s clear that the U.S. crops are far from finishing growing.
For Thursday’s report, the average trade’s U.S. corn production estimate is 13.67 billion bushels vs. the USDA’s August estimate of 13.9 billion bushels.
The average trade’s yield estimate of 167 bushels per acre compares with the USDA’s previous estimate of 169.5 bushels per acre.
Pete Meyer, SPGlobal senior analyst, says given the fact that objective yield plots were not used in August, there is a sense that their inclusion in September will make a big difference.
“Although, it’s important to remember that the number of overall plots used by NASS has shrunk from last year due to budget cuts. With that in mind, I would suggest that the farmer surveys will be front and center again this month in terms of importance, and it doesn’t appear that farmer sentiment has changed much month over month. The risk, in our opinion, is for a flat to slightly higher yield number in this report,” Meyer says.
SPGlobal’s modeling is suggesting a “final” corn production number of 13.65 billion bushels based on a lower yield.
“Even though that number is 250 million below the August WASDE when ending stocks were 2.2 billion, demand lag makes a sub-2 billion bushel carry out at year’s end very difficult in our opinion,” Meyer says.
Jason Britt, president of Central States Commodities, Inc., says he is watching for any changes in the USDA’s preventive-planting estimates.
“I have my doubts the USDA will cut yields much in this one, even though that's what the trade expects. Think we will have to get in to harvest before we see a more aggressive cut later on,” Britt says.
In its August report, USDA estimated 82 million U.S. corn harvested acres. That number seemed high to a lot of market watchers.
“Since then, the Farm Service Agency has reported that the cover crop acres have doubled to 4.7 million. Question is, will the USDA adjust corn harvested acres down in this report to reflect that or will we have to wait until October, November, or even possibly January before we see that,” Britt says.
For soybeans, the average U.S. output trade estimate for the USDA report Thursday is 3.577 billion bushels, with an average yield estimate at 47.2 bushels per acre. If realized, the yield estimate would be 1.3 bushels per acre lower than the government’s August estimate.
SPGlobal’s soybean yield stands at 45.8 bushels per acre for a total production number of 3.5 billion.
“We do expect that while old-crop bean exports might have been understated by 50 million bushels, and our production number is lower than most, the carryout will not be below 600 million bushels by January,” Meyer says.
Meyer added, “This is due to our reduced 2019/20 soybean export expectation of 1.7 billion bushels, based in no small part to lower global Chinese imports of roughly 80 million metric tons, as compared to WASDE at 87 million metric tons in July and 85 million metric tons in August. Trade War or not, Chinese demand for soybeans should show another year of contraction due to African Swine Fever.”
Deanna Hawthorne-Lahre, StatFutures trader, says the soybean numbers from the USDA will be the wildcard this time around.
“The fields are still mostly green in the northern Corn Belt and the crops need more growing-degree days,” she says. “It’s going to be interesting. The problem, of course, is the ASF in Southeast Asia. Still think we don't have the full number dead. Demand will be an issue for a year or two. This lower soybean demand is not about tariffs,” she says.
Hawthorne-Lahre says she will also be watching the report for any world changes.
“Russia and Australia are very dry. So, we might see some dial back in the wheat numbers and some feed changes into corn,” Hawthorne-Lahre says.
Regarding how investors will react to the USDA corn numbers, Hawthorne-Lahre is cautious.
“The corn market is very complacent, given the size of the break in prices, but the speculators got a bit ahead of themselves, and I think the producer did not get any serious number sold north of $4.25,” she says.
Alan Brugler, president Brugler Marketing & Management LLC, agrees with the old-crop soybean stocks cut, as exports likely to be raised and crush could be, as well.
“The soybean yield is likely to be dropped, although USDA could defer until October because the crop is so immature. We're using 47.5 bushels per acre internally,” Brugler says.
If it cuts corn production to 13.48 billion, you should see the new-crop stocks tighter and a bump up in the cash average price for the year.
Brugler sees the main question for Thursday’s update of the USDA data is what it will do with yields.