The effects of dryness and drought this summer have begun to show up in the Sept. 12 World Agricultural Supply and Demand Estimates released by the United States Department of Agriculture, as estimated yields for both corn and soybeans fell below market expectations.
The report’s 2022-2023 U.S. corn outlook was for lower supplies, smaller feed and residual use, reduced exports and corn used for ethanol, and tighter ending stocks. The report reduced estimated corn yields and estimated production at 13.9 billion bushels, down 415 million bushels from August’s estimates. The estimated harvested area was also reduced. Yield estimates were down in all states except Illinois. The national average yield was forecast at 172.5 bushels per acre, down 2.9 bushels from previous estimates. Corn ending stocks for 2022 were down by 12% from the August forecast. The report, especially the tight ending stock, sent prices up.
Total U.S. corn use was cut by 250 million bushels to 14.3 billion. Feed and residual use was lowered 100 million bushels based on a smaller crop and higher expected prices. Exports were cut 100 million bushels to 2.3 billion, while corn used for ethanol was lowered 50 million to 5.3 billion bushels—the same amount as last year, but a decline of 50 million bushels from the August estimates.
Jim Mintert, executive director of the Center for Commercial Agriculture at Purdue University, said “We’ve essentially capped ethanol usage.” Ethanol margins were still strong but weakening as the summer driving season ended. Corn yield estimate reductions were largest in hard-hit western drought states like Nebraska and Kansas.
The WASDE raised corn production estimates for China, due to abundant rainfall in key Northeast provinces and the North China Plain that boosted yields. Ukraine corn production was also raised with an increase in yield expectations, while Canada was higher based on greater indicated area. Corn production in the European Union was lowered, based on reductions for France, Romania and Germany.
Soybean yields down
Soybean yields were also reduced well below market expectations. Overall harvested area was down 0.6 million acres from the August forecast. The soybean yield forecast of 50.5 bushels per acre was down 1.4 bushels from August. The crush forecast was reduced by 20 million bushels and the WASDE soybean export forecast was reduced by 70 million bushels on lower supplies. The level of soybean crop rated good-to-excellent was about middling, better than corn but average compared to past years. Soybeans saw yield estimate reductions in all states except Iowa and Michigan. Soybean prices jumped on the news, but settled back down mid-week.
Soybean export estimates were reduced by 70 million bushels to 2.09 billion bushels—related to developments in China, according to Mintert, mainly ongoing lockdowns due to the COVID resurgence there and continuing livestock challenges. U.S. soybean ending stocks were tight, at 4.5% of usage, versus 5.2% of usage last year at this time.
An increase in planted soybeans of about 5 million acres was expected in South America.
Michael Langemeier, associate director at the Center of Commercial Agriculture at Purdue, said both corn and soybeans were settling back into returns similar to 2020, rather than the record returns of the 2021-22 season.
The WASDE raised Ukraine’s estimated sunflower seed production by 1 million tons to 10.5 million, due to favorable August rainfall. It also raised Ukraine’s soybean production estimates due to higher planted area.
The 2022-23 U.S. wheat outlook for supply and use remained unchanged. The projected 2022-23 season-average farm price was lowered 25 cents per bushel to $9 on reported NASS prices to date and expectations for cash and futures prices—a record SAFP despite the slight decline.
David Murray can be reached at [email protected].