Jul 13, 2014
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Farmland Forecast

RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

WASDE: No Longer Record Corn Production

Jul 11, 2014

Record corn production is no longer expected for the 2014/15 marketing year due to a reduction in total harvested acres, but the projected average U.S. corn yield is expected to break 2009's record of 164.7 bushels per acre by 0.36%. Cooler than average temperatures are expected in July and August, which match trends seen in years with above trend line yields, including 1972, 1979, 1982, 1994, 2004, and 2009. Mild temperatures in the upcoming weeks are extremely favorable for corn during the critical pollination period.

Harvested area of U.S. soybeans was significantly increased, according to the June 30th Acreage Report, to 84.1 million acres, which projects the 2014/15 crop at a record 3.800 billion bushels. Such a record crop would increase estimated ending stocks by 21.7%, the largest ending stocks since 2006/07.

Corn

U.S. corn ending stocks for the 2013/14 marketing year were projected 100 million bushels higher to 1.246 billion bushels, primarily due to decreased feed and residual use. Exports for U.S. corn in the 2013/14 marketing year were unchanged from last month remaining at 1.900 billion bushels.

For the 2014/15 marketing year, U.S. corn ending stocks were projected to be 1.801 billion bushels due to another nearly record year of production. U.S. exports were estimated at 1.700 billion bushels with total usage of 13.335 billion bushels. Projected total production was estimated at 13.860 billion bushels. U.S. corn use for ethanol was estimated 25 million bushels higher based on the pace of ethanol production to date. The 2014/15 season-average farm price for corn was estimated at $3.65 to $4.35 per bushel, compared to $4.35 to $4.55 per bushel for 2013/14.

U.S. Ending Stocks (Million Bushels) 2013/14

Grain

July 2014

Average Estimates

June 2014

Corn

1,246

1,316

1,146

Soybeans

140

132

125

Wheat

590

-

593

 

U.S. Ending Stocks (Million Bushels) 2014/15

Grain

July 2014

Average Estimates

Corn

1,801

1,807

Soybeans

415

417

Wheat

660

590

 

Soybeans

Estimated U.S. soybean exports for 2013/14 were increased 20 million bushels to 1.620 billion bushels. Ending stocks were increased 15 million bushels to 140 million bushels this month, due to decreased residual usage more than offsetting increased crushing usage. The soybean stock-to-use ratio increased to 4.1%.

For the 2014/15 marketing year, U.S. soybean ending stocks were projected at 415 million bushels. Exports were estimated at 1.675 billion bushels with total usage of 3.541 billion bushels. The projected soybean yield was unchanged at 45.2 bushels per acre, but total production was increased to a record 3.800 billion bushels due to a 4.3% increase in harvested area. The 2014/15 season-average farm price for soybeans was estimated at $9.50 to $11.50 per bushel, compared to $13.00 per bushel for 2013/14.

Wheat

U.S. wheat ending stocks for 2013/14 were deceased by 3 million bushels to 590 million bushels primarily due to an increase in exports, which were increased to 1.182 billion bushels.

For the 2014/15 marketing year, U.S. wheat supplies were projected at 660 million bushels, a 26 million bushel increase from 2013/14 due to lower residual feed use and greater production. The 2014/15 all wheat average price was estimated at $6.00 to $7.20 per bushel.

Outlook

With the recent release of the USDA Grain Stocks and Acreage reports on June 30th, there was little surprising news in this month's WASDE report. July weather is one of the most crucial variables the USDA tracks to estimate crop production. Weather conditions throughout the next few weeks, as corn pollinates, will be vital to the overall yield outlook.

The August WASDE will incorporate, for the first time this year, a farmer survey and an objective yield survey to estimate production. The farmer survey is a questionnaire and the objective yield survey is based on actual randomly selected field tests.

USDA Weekly Exports: Soybean Exports Hit 2014 Low

Jul 10, 2014

Last week’s USDA Stocks and Acreage report’s did not factor the severe weather seen in pockets of the Corn Belt during the month of June so analysts are eager for Friday’s World Agriculture Supply and Demand Estimates report. Tomorrow’s report will show if the USDA believes the flooding, hail, and strong wind across the Midwest had any significant impact on the overall corn and soybean crops for 2014. Looking forward, high temperatures in July are expected to be below average providing perfect weather for corn pollination, which is expected to start in the next five to seven days.

Corn and wheat sales increased, while wheat sales fell. Exports of corn and wheat increased, while soybean exports fell to their lowest level of 2014.

Weekly U.S. net corn sales for the week ending July 3rd in the 2013/2014 marketing year were 363,000 metrics tons (MT), a 25% increase from the previous week, but a 15% decrease from the prior 10-week average. Increases were reported from South Korea, Japan, Egypt, Taiwan, Venezuela, and Peru. Decreases were reported from unknown destinations, China, Guatemala, and Nicaragua. Exports were 1,207,100 MT, a 33% increase from the prior week and a 6% increase from the prior 10-week average. The primary destinations were Japan, Mexico, South Korea, Taiwan, Venezuela, the Netherlands, Egypt, and Morocco.

Weekly net soybean sales in the 2013/2014 marketing year were 56,300 MT, a 39% increase from the previous week, but a 38% decrease from the 10 week average. Increases were reported from China, Taiwan, Japan, Thailand, and Vietnam. Decreases were reported from unknown destinations. Exports were 89,500 MT, a 29% decrease from the prior week and a 50% decrease from the prior 10-week average. Primary destinations were Mexico, Japan, Indonesia, Thailand, and Taiwan.

Weekly net wheat sales for the week ending July 3rd in the 2014/2015 marketing year were 338,100 MT, a 40% decrease from the previous week, but a 26% increase from the prior 10 week average. Increases were reported from the Philippines, Saudi Arabia, South Korea, Mexico, Brazil, and Nigeria. Decreases were reported from unknown destinations, and the United Arab Emirates. Exports were 394,700 MT an 18% increase from the prior week, but a 23% decrease from the prior 10-week average. Primary destinations were the Philippines, Saudi Arabia, Japan, Brazil, South Korea, Venezuela, Jamaica, and Mexico.

7 10 14 Sales

Source: USDA Foreign Agricultural Service

7 10 14 Exports

Source: USDA Foreign Agricultural Service

For daily articles on farmland and agriculture, visit http://www.farmlandforecast.com/

Crop Progress: Milder Weather Leaves Conditions Unchanged

Jul 07, 2014

The condition of this year’s corn crop is drastically different across the Corn Belt. Pockets of central Illinois, eastern Iowa, and Indiana have reported corn beginning to tassel, while farmers in the western Corn Belt continue to deal with wet and flooded fields. The USDA World Agriculture Supply and Demand Estimate (WASDE) report will be released this Friday and it will give a better idea of the USDA’s expectation for this year’s corn crop following the extensive amount of flooding, hail, and wind experienced by farmers in the western Corn Belt throughout June.

The USDA estimated corn conditions at 75% of the crop rated "Good" or "Excellent", unchanged from the previous week, but a 7% increase from last year. 20% was considered "Fair" down 1% from last week, while only 5% was considered "Poor" or "Very Poor." Corn silking was reported at 15%, a 10% increase from last week, but 3% behind the five-year average.

Soybean emergence was reported at 98% in the last week it will be reported this year. That is a 4% increase from last week and 1% ahead of the five-year average. Soybean conditions were reported with 72% of the crop in "Good" or "Excellent" condition, unchanged from last week, but a 5% increase from last year. 23% was reported in "Fair" condition, while only 5% was reported as "Poor" or "Very Poor." Soybeans blooming were reported at 24% this week, up 14% from last year, and 3% ahead of the five-year average.

The winter wheat crop was reported 57% harvested, up 14% from last week, but 3% behind the five-year average. There was a slight change in the conditions report for wheat; 31% was rated "Good" or "Excellent" a 1% increase from last week, 25% was rated "Fair" a 1% decrease from last week, and "Poor" or "Very Poor" rated crop was unchanged at 44%.

July futures for corn closed the week at $4.09 per bushel, a 3.5% decrease from last week. July soybeans ended the week at $13.63, a 2.6% decrease from last week, and July wheat ended the week at $5.45, a 3.4% decrease from last week. Year-to-year corn prices are down 40.8%, soybeans are down 15.3%, and wheat is down 17.4%.

For daily articles on farmland and agriculture, visit http://www.farmlandforecast.com/

USDA Weekly Exports: Rain and Severe Weather Summarize the 2014 Planting Season Thus Far

Jul 03, 2014

In a continuing trend for this growing season, severe weather and rain continued to flood areas of Iowa, southern Minnesota, and Wisconsin. Hail and strong wind was reported in areas of northwestern Iowa and southeastern South Dakota, shredding and knocking down corn. The USDA Stocks and Acreage reports were released on Monday. Soybean stocks remain low and the USDA has begun importing soybeans to bolster domestic supplies. Monday's USDA Crop Progress report increased the conditions estimate for corn and soybeans despite the flooding and severe weather in major growing areas.

Wheat sales increased after declining the past two weeks. Corn sales decreased slightly and soybeans sales decreased significantly. Soybean exports increased, while corn and wheat exports both fell.

Weekly U.S. net corn sales for the week ending June 26th in the 2013/2014 marketing year were 290,700 metrics tons (MT), a 10% decrease from the previous week and a 37% decrease from the prior 10-week average. Increases were reported from Mexico, Japan, the Netherlands, South Korea, Saudi Arabia, and Portugal. Decreases were reported from unknown destinations, Spain, and Venezuela. Exports were 909,500 MT, a 21% decrease from the prior week and a 25% decrease from the prior 10-week average. The primary destinations were South Korea, Egypt, Mexico, Japan, the Netherlands, Saudi Arabia, and Colombia.

Weekly net soybean sales in the 2013/2014 marketing year were 40,600 MT, an 87% decrease from the previous week and a 53% decrease from the 10 week average. Increases were reported from Malaysia, Indonesia, unknown destinations, Taiwan, and Japan. Decreases were reported fromm Mexico. Exports were 126,300 MT, a 28% increase from the prior week, but a 31% decrease from the prior 10-week average. Primary destinations were Mexico, Indonesia, Malaysia, Thailand, and Taiwan.

Weekly net wheat sales for the week ending June 26th in the 2014/2015 marketing year were 567,500 MT, a 58% increase from the previous week and a 130% increase from the prior 10 week average. Increases were reported from Brazil, Taiwan, Mexico, Japan, unknown Destinations, and Nigeria. Decreases were reported from Ecuador. Exports were 335,500 MT a 43% decrease from the prior week and a 37% decrease from the prior 10-week average. Primary destinations were the Philippines, Japan, Mexico, Brazil, South Korea, Colombia, Algeria, and Honduras.

7 3 14 Sales

Source: USDA Foreign Agricultural Service

7 3 14 Exports

Source: USDA Foreign Agricultural Service

For daily articles on farmland and agriculture, visit

http://www.farmlandforecast.com/

Record Yields, Acres, and Rainfall

Jul 01, 2014

May concluded an excellent planting season for many farmers across the Corn Belt, but consistently wet conditions have raised concern about a majority of the U.S. corn and soybean crops. Weekly rainfall totals surpassed 17 inches in some areas of northwest Iowa in June, causing significant flooding.

"We're well passed the flood conditions of 1993 here in Illinois," commented a farmer contact in Macoupin County, Illinois. A farmer in York County, Nebraska noted, "Due to the rain we've already received this season, we may not have to turn on the irrigation until late July."

Excess moisture problems are present in North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, and Illinois in widespread and damaging effect. Until water tables decrease, yield damages will not be accurately estimated.

On June 30th, the USDA estimated 91.4 million acres of corn were planted in the U.S. The estimated corn acres mark the smallest planted U.S. corn crop since 2010 and 4% less than in 2013. Soybean planted acreage was estimated 11% higher than in 2013 to a record 84.8 million acres in 2014.

Grain Prices

Corn prices declined by 8.8% throughout June and the July contract closed at $4.24 per bushel. Estimated U.S. corn stored in all positions was 39% higher year over year in the June 30th USDA Grain Stocks Report. Of the 3.85 billion bushels currently stored, 48% was estimated to be held on farm; up 48% year over year.

The USDA did not change the average corn yield estimate of 165.3 bushels per acre which is set to break the 2009 record of 164.7 bushels per acre, according to the June WASDE Report. Global 2014/15 corn production was estimated 2 million tons higher due to increased production in Russia, the EU, and Ukraine.

Soybean prices decreased by 6.2% this month, closing at $14.00 per bushel. The USDA stunned analysts in the Acreage Report on June 30th, estimating a record 84.8 million acres of soybeans were planted in the U.S. A delayed planting season and very attractive soybean prices lead farmers to plant substantially more soybeans than previously anticipated. The estimated 2014 planted soybean acres are 11% more than in 2013 and 7.4 million acres above the previous record.

The USDA reduced 2014/15 U.S. ending soybean stocks by 5 million bushels to 325 million bushels and also reduced 2013/14 ending stocks by 5 million bushels to 125 million bushels due to increased crush usage, according to the WASDE Report.

Wheat prices decreased by 10.1% in June and closed at $5.64 per bushel. USDA estimated wheat stored in all positions at 21.5 million bushels, 18% lower than in 2013. An estimated 56.5 million acres of all varieties of wheat were planted this year, an increase of less than 1% year over year. U.S. winter wheat production was estimated 21 million bushels less in the WASDE Report, due to the on-going poor crop conditions. Total U.S. wheat exports were estimated 25 million bushels lower to 925 million bushels, due to tighter U.S. supplies and growing global competition.

Crop Progress

75% of the U.S. corn crop is in good or excellent condition and only 5% is in poor or very poor as of the June 30th USDA Crop Progress Report. Last year, 67% was in good or excellent condition and 8% in poor or very poor. Meanwhile, 72% of the U.S. soybean crop is in good or excellent condition and 5% is in poor or very poor. Last year, 67% was in good or excellent condition and 7% in poor or very poor condition as of the end of June.

The upcoming corn pollination period in mid to late July will greatly affect crop conditions and yields moving forward. Additionally, crop conditions may severely suffer due to all the excess rainfall. Standing and ponding water has been leaching the critical nutrient nitrogen out of the soil and may lead to a lack of nitrogen for the corn crop in the upcoming weeks.

Farmland Values

Farmland has been providing investors excellent appreciation and cash returns for decades. In a study of the investment performance of Iowa farmland versus the S&P 500 since 1950, Iowa State University found that farmland yielded a 41% higher total return for investors over the S&P 500. Using historical information, Iowa State pitted a $1,000 investment in Iowa farmland made in 1950 against the same investment made in the S&P 500 and found that by 2013, the farmland investment would have been worth $978,200.00 and the S&P 500 investment would have been worth $708,824.00. The farmland investment saw an average annual total return of 4.8% versus 3.4% from the S&P over the 63 year holding.

Outlook

The bearish USDA Acreage and Grain Stocks Reports lead to a reduction in grain prices at month end, but we are optimistic moving forward due to these compelling reasons:

·         Global demand for corn, soybeans, and wheat has been aggressively growing and major importers are now presented with an excellent window of opportunity to rebuild stockpiles creating renewed global demand.

·         The Acreage Report was as of June 1st and the Corn Belt has been experiencing unprecedented rainfall throughout June, causing widespread major crop damage. The record soybean crop is at risk as is the corn crop due to poorly developed and shallow root systems. High soil moisture stunts root growth in June as crop roots do not need to expand out very far to source moisture. In later months, when rainfall diminishes, the root systems are unable to source adequate water for optimal growth.

·         The USDA's record corn yield estimate of 165.3 bushels per acre is achievable only if all conditions are optimal. Since the June 11th WASDE Report, weather conditions have not remained advantageous and the total size of the U.S. corn crop could be in jeopardy.

Moving forward, the weather will be a major factor for grain prices. The crucial corn pollination period is within weeks away and can position the plant for excellent or very poor yields, depending on the humidity, temperature, rainfall, and wind.

For more articles on farmland and agriculture, visit www.farmlandforecast.com

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