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USDA Still Betting on Mammoth Corn Crop

May 10, 2014
By: Sara Schafer, Farm Journal Media Business and Crops Editor
corn ears
  

USDA reinforced its prediction for record corn and soybean crops in 2014.

USDA had its first chance to lower 2014 yield expectations on Friday, May 9 in its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE). But it resisted the urge.

Even with corn planting being behind the five-year average, USDA forecast 2014 corn production a record 13.935 billion bushels, with an average national yield of 165.3 bu./acre. For soybeans, 2014 production is estimated at 3.636 billion bushels (also a record) and the average national yield is pegged at 45.2 bu./acre.

"A lot of people, including me, thought there was no way they would use the 165 bu./acre yield estimate," says Jerry Gulke, president of The Gulke Group. He says USDA has a history of using trendline yields, as long as 50% of corn planted by May 15.

As of May 4, USDA estimates 29% of the U.S. corn crop is in the ground Last year only 11% of the corn crop was planted by May 4 and the five-year average is 42% by early May. According to 1,400 farmers and ranchers responding to the May 7 Farm Journal Pulse, 48% of corn is planted.

Hear Gulke's full audio analysis:

Corn planting is severely behind in Minnesota, Iowa, Ohio, Wisconsin, Michigan, North Dakota, Pennsylvania and North Carolina, as all are 15 percentage points or more behind average. Yet, farmers in Colorado, Kansas and Missouri are 5 percentage points or more ahead of the average planting pace.

Gulke says since corn planting in the central and southern parts of the Corn Belt are nearly done, the market isn’t strongly reacting to planting delays. "The market is saying they don’t care if we plant the corn in the Dakotas, Minnesota, Wisconsin or Michigan," he says. "We think we’re going to have enough by the I States on south and what gets planted in Minnesota."

Another surprise in the report was old-crop demand, Gulke says. USDA lowered the 2013-14 carryout to 1.146 billion bushels. The average analyst estimate was 1.314 billion bushels. He says they increased exports but didn’t significantly change feed and residual or ethanol usage.

Lower demand and higher production leaves the 2014-15 estimated corn ending stocks at 1.7 billion bushels, up 580 million bushels from the projection for 2013-14. With the larger carryout, USDA predicts a season-average farm price of $3.85 to $4.55 per bushel, down from $4.50 to $4.80 per bushel for 2013/14.

For soybeans, U.S. crush for 2014/15 is projected at 1.715 billion bushels, up 20 million from 2013/14. Despite lower prices, soybean meal exports are projected up only slightly with Argentina soybean meal exports accounting for most of the gains in global soybean meal trade.

U.S. soybean exports are projected at 1.625 billion bushels, up 25 million from 2013/14 on record supplies and competitive prices. Despite gains in use, ending stocks for 2014/15 are projected at 330 million bushels, up 200 million from 2013/14. The U.S. season-average soybean price for 2014/15 is forecast to decline to $9.75 to $11.75 per bushel compared with $13.10 per bushel in 2013/14.

Read complete coverage of the May 9 USDA reports.

 

Have a question for Jerry? Contact him at 815-721-4705 or jerry@gulkegroup.com.

 

For More Information  
See current market prices in AgWeb's Market Center.


 

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COMMENTS (4 Comments)

Bulldawg - Greensburg, IN
The May 9th WASDE report held surprises on both end of the spectrum. As far as the old crop (2013/14 crop) on corn, surprisingly lowered carryout well beyond everyone's expectation. Conversely, USDA chose to stay with the statistical trend-line yield from the Outlook forum, resulting in huge carryout (once again) for next year (2014/15 crop).

So are you upset with the numbers or the reaction to the numbers (CME prices)? I guess we all have to realize these are estimates of what USDA sees if we have an average growing season here forward, which is seldom what happens. We are either going to exceed or fall short of this production estimates. And predicting demand 15 months in advance is even more impossible.

Bottom line - every one of these numbers can & will change, and the market sometimes moves in expected fashion and sometimes it doesn't.

Removing the data (WASDE/USDA) would only make this much worse, as we then have to rely on much less accurate info by the trade.

If you think their is manipulation now, you will need a much taller & stronger soapbox. Sometimes USDA guesses right and sometimes they guess wrong. And I would guess that hasn't change over the 151 year of their existence.
9:52 AM May 12th
 
Bulldawg - Greensburg, IN
The May 9th WASDE report held surprises on both end of the spectrum. As far as the old crop (2013/14 crop) on corn, surprisingly lowered carryout well beyond everyone's expectation. Conversely, USDA chose to stay with the statistical trend-line yield from the Outlook forum, resulting in huge carryout (once again) for next year (2014/15 crop).

So are you upset with the numbers or the reaction to the numbers (CME prices)? I guess we all have to realize these are estimates of what USDA sees if we have an average growing season here forward, which is seldom what happens. We are either going to exceed or fall short of this production estimates. And predicting demand 15 months in advance is even more impossible.

Bottom line - every one of these numbers can & will change, and the market sometimes moves in expected fashion and sometimes it doesn't.

Removing the data (WASDE/USDA) would only make this much worse, as we then have to rely on much less accurate info by the trade.

If you think their is manipulation now, you will need a much taller & stronger soapbox. Sometimes USDA guesses right and sometimes they guess wrong. And I would guess that hasn't change over the 151 year of their existence.
9:52 AM May 12th
 
WhyMeJake
What%E2%80%99s%20Needed%20to%20Push%20Corn%20Prices%20Above%20$5?%0A%0ARecord%20Crops,%20Lower%20Pri​ces%20Ahead%20%0A%0AThese%20are%20the%20headlines%20for%20the%20two%20most%20popular%20articles%20on​%20the%20website.%20%20Kind%20of%20funny%20but%20I%20was%20wondering%20if%20the%20USDA%20had%20come%​20out%20with%20a%20more%20accurate%20forecast%20which%20read:%20%20Planting%20way%20behind,%20ground​%20temperatures%20much%20below%20average,%20Low%20to%20mediocre%20yields%20at%20best?%0A%0AWhere%20h​ave%20all%20the%20real%20news%20reporters%20gone?​
12:00 PM May 10th
 
WhyMeJake
If the USDA ever came out with less than a bin buster in the spring, I think most farmers would faint from the absolute shock. Other crop forecasters that actually accept such information as accurate are worth the same as those government agencies. When it flies in the face of all information that we know, someone has to stand up and state the obvious. Somebody is lying, incredibly inept in analyzing the data or is trying to manipulate the markets.

Well, everyone knows the USDA is there for us farmers so we know that last on cannot be. So when we look at the fact that the planting is way behind, the ground temps are so low and the other problems across the country, what other options would be left. There must be one because we would never allow lying in our government. The President would see to that. And complete ineptitude would not be tolerated either. Aha, I'm guessing someone found a crystal ball and it's still froze up from the long winter and is giving faulty readings. It's the same one our financial leaders have been using for the last 5 years or so.

Seriously, these reports seem of such little value, why not save some taxpayers money and delete this whole department. I can write this report each spring for $50. It's always the same! Big bin busting year ahead. All crops with even more acres than last year. Funny the fences haven't been stretched and broken by all that expansion.
10:54 AM May 10th
 



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