U.S. corn harvest continues to gain speed, as USDA says as Sept. 26, 18% of the corn had been harvested, which is 3 points ahead of last year. The progress is also an 8-percentage point jump in a week.
But as harvest rolls along, USDA sent a surprise supply shock to the soybean market this week. The September Quarterly Grain Stocks report caused soybean futures to drop double digits after USDA’s report showed old crop soybean stocks are now pegged at 256 million bushels. While that number is down 51% from last year, the revision was higher than trade and many analysts expected. The adjustment in carryout came from USDA revising last year’s production up 80 million bushels, moving the yield to 51 bu. per acre.
“The biggest one is another volatile surprise, and probably the biggest surprise was the soybean number. Seeing that carryout grow like it did was kind of unprecedented historically,” Jim McCormick of AgMarket.Net told AgDay’s Clinton Griffiths. “We have a pretty good handle on what we use on beans, consumption wise. So, the surprise usually comes on the supply end, and that’s what happened again this year.”
USDA set old crop corn stocks at 1.24 billion bushels, which is down 36% from last year, but also higher than the trade expected. The agency says it was a smaller corn harvest last year, revising production down 71 million bushels, which is the lowest since 2014. That puts last year’s yield at 171.4 bu. per acre, which is down a little more than half a bushel from the previous estimate.
While the supply shocks came to the 2020 final production number, Dan Basse, AgResource Company, thinks the national corn yield still has room to change for the 2021 production year.
“Our yield data, which we’re getting fairly comfortable with now, is projecting a corn crop below the last year on yield,” says Basse. “Beans are a little variable early yet, but I’m becoming more and more confident that we may see a sub-171 bu. per acre corn crop by the final. And that’s a big deal in terms of the overall structure of the market.”
Mike North, ever.ag, says mixed corn yield reports so far this year aren’t enough to give a clear picture of 2021 production yet.
“I think it’s still early enough in the game where nobody really has a great sense, because of those great yields that we are hearing about, where there are also some stories in Missouri and extreme southern Iowa that are getting some bad yields. So, there’s a pretty mixed bag. But generally speaking, as we’ve progressed to the soybean crop, a lot of great yields are coming out of that. So going into that October report, there’s a pretty good chance that some of these early discussions of another heightened yield and another increase to the number could be on the horizon.”
Concerns with the Gulf
Basse says while the U.S. still wades through upcoming production reports, he thinks issues with getting exports loaded and on ships in the Gulf may be a bearish factor short-term for commodities like corn and soybeans.
“World demand is up,” says Basse. “When we look at world trade, it’s doing very, very well. However, we do have this problem in the Gulf. And it’s not going to be rectified, probably, until the end of October or November. So, that will be a little bit of a drag in the markets. But as we think and look at the world trade of corn, soybeans and wheat, it’s higher. USDA is too low, and we need to move upwards. The question is, where’s the grain come from?”
