USDA’s October Crop Report stunned the market with some bearish adjustments. And as the market inched closer to the next USDA report, soybean prices took another turn lower, indicating traders are expecting more adjustments to the soybean supply and demand picture.
Days after USDA released those October numbers, U.S. Farm Report sat down with USDA Chief Economist Seth Meyer after the October report to get his take on the numbers. And one of the biggest questions from analysts was why USDA didn’t make bigger revisions to China’s demand. Meyer told U.S. Farm Report that simply comparing this year to last year is unjust.
“We had a really unusual year as the Chinese started to come into our market early,” says Meyer. “Once we turned kind of a corner in August, we had the Chinese come into the market hard. So, I’m not sure a comparison to the prior year is probably the best place to start. We’ll continue to evaluate about how we get there.”
While it’s unclear just how big of an appetite China will have this marketing year, the fact reports show China has rebuilt its hog herd will be a factor. The only issue is Hurricane Ida’s damaging impact on exports early.
“We always think about the fact this is our six months of the year, quite honestly, we have a very split season with the South Americans,” says Meyer. “Usually, I just think that the simple comparison to the prior year probably underestimates our potential. And yes, we’ve had some short-run disruptions. But I also think we talk about forward sales, too. Well, forward sales, when there’s the possibility of softening prices, those tend to go away, as well, So, a simple pace analysis hides a lot of the things that are going on in that market.”
So, what about yields? USDA’s report last month showed both an increase in corn and soybean yields.The corn yield came in at 176.5 bu. per acre, up slightly higher from September. Soybeans were pegged at 51.5 bu. per acre, which was nearly a full bushel above September’s report.
“There are bits and nuggets in the October reports that were really quite interesting,” adds Meyer. “201 bushels an acre in Iowa. And I was making the point, ‘hey, if you go north and west of Des Moines, it’s dry. If you go straight east of Des Moines, you got record yields.’ So in that regard, pretty impressive yields in some places, given the conditions.”
The soybean yield saw the bigger adjustment. And as field reports continue to roll in, it seems areas that saw rains in August were the yield boost the plants needed at the time. However, Meyer says it’s not inevitable USDA will make big adjustments in Tuesday’s report.
“The soybean yield has been inching up and it’s the largest overall production crop on record, at the moment. And usually, we don’t change much from October. Usually,” says Meyer.
Meyer is also working closely on trying to work through supply chain issues. He dives into some of those details with U.S. Farm Report in the exclusive discussion.
Meyer will also join a panel of economists and exports to talk through the current supply chain chaos and how it’s impacting agriculture. That will take place during an upcoming Farm Country Updated. Hosted by AgriTalk’s Chip Flory, the panel also includes Allan Gray of Purdue University, Jeff Tarsi with Nutrien Ag Solutions and Sam Taylor, RaboResearch Food & Agribusiness. The discussion takes place Wednesday, November 10 at 3 Central.
