‘Significant’ corn yield hike; Soybeans unchanged in USDA report

KANSAS CITY, Mo. — In the days leading up to the U.S. Department of Agriculture’s crop production report, trade analysts expected corn yields to drop slightly due to dry conditions.

However, USDA increased the U.S. corn yield average by one-half bushel, and soybeans were unchanged.

Arlan Suderman, StoneX chief commodities analyst, wasn’t surprised by most of the crop production and supply and demand estimate reports’ moves.

How did USDA’s number compare to pre-report expectations?

Suderman: The report put the corn crop at 183.6 bushels per acre and soybeans were unchanged at 53.2 bushels per acre. USDA’s August corn yield number was 183.1. Our last customer corn yield survey was at 182.9. So, USDA is seven-tenths of a bushel above us. Which one of us is right is within the margin of error.

The trade was expecting 182.4 per acre for corn. That’s 1.2 bushel per acre below where USDA came in. That is significant.

The trade was not expecting a change in soybeans and that’s the way it ended up. So, we ended up with roughly the same size soybean crop the trade expected, but yet a corn crop about 110 million bushels bigger than the trade expected.

There were some changes in the old crop numbers as we start the beginning of the 2024-2025 marketing year, right?

Suderman: USDA increased old crop ethanol demand and old crop exports, and that lowered the old crop ending stocks by about 55 million bushels.

USDA added 15 million bushels to its old crop ethanol estimate. I had added 5 million on my estimate, so maybe they know something more than I do about what happened in August that didn’t show up in my calculations.

USDA added 50 million bushels to old crop exports and I was about 10 million bushels higher. That became a lower beginning stock number for the current year.

When you factor in the demand for this year, corn ending stocks ended up higher than what the trade expected by about 50 million bushels, but down 16 million from last month and down just 4 million from we had anticipated.

So, we’re still comfortably above that 2 billion bushel mark which is seen as bearish. I do think we’ll see exports improve in the last half of the marketing year, and I think we’ll be OK.

USDA did drop soybean ending stocks, primarily because of adjustments to the old crop balance sheet with crush increased by 5 million bushels and they cut some residual use and other factors. So, there were very modest changes.

Other domestic usage also increased modestly, resulting in a decrease of 10 million bushels to soybean ending stocks from 560 million last month to 550 million this month, but there’s nothing bullish about that at all.

Soybean export sales have trailed the seasonal pace needed to meet USDA’s target by over 150 million bushels. The same thing happened a year ago and USDA had to bring its target down, and unfortunately I’m anticipating the same thing happening this year as well unless South America has a major failure in its crop.

Why did the USDA keep soybean production estimates unchanged?

Suderman: That was probably appropriate this early in the development. Pod counts were down from last year and ear counts down for the corn.

That would suggest for corn that the mild temperatures in August were a bigger factor than the dry soils for most areas.

For soybeans, I think we need to be careful about making any assumptions. That’s why USDA didn’t make any changes is because much of the crop is still in the process of filling those pods. Next month’s numbers will give us a lot more confidence.

Was there any data from the global balance sheets that stood out?

Suderman: We saw European wheat production go down by 4 million metric tons, from 128 million to 124 million metric tons. Some private and even public estimates are as low as 116 million, so there may be more downside there.

The other factor, though, that partially offset that is Australia went up by 2 million metric tons with a bigger than expected crop anticipated in the crop that’s currently developing there in what is their early spring time period.

The balance sheet is getting tightened up a little bit, but not necessarily immediately bullish for wheat.