Bumper corn, soybean crops on the way

by Ron Sterk
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Key U.S. Department of Agriculture data for the season to date were released June 30 in the form of annual Acreage and quarterly Grain Stocks reports. And if the planted and harvested area numbers hold true, along with at least average weather for the rest of the growing season, the United States should expect record-large corn and soybean crops in 2014. The spring planted wheat classes also are expected to fare well, while much of the winter wheat crop now being harvested has struggled all season.

The key to bumper corn and soybean crops, especially yields, always is weather, and those prospects look favorable. Mid-season ratings from the U.S.D.A. suggest mostly good to excellent crop conditions that, assuming near normal weather during the rest of the growing season, should translate into a bumper fall harvest.

David Salmon, president of Weather Derivatives, an energy and agricultural weather consultant in Belton., Mo., said he sees “nothing that could happen” from a weather standpoint that could hurt corn production prospects going forward.

“The weather probably gets a little better,” Mr. Salmon said. He expects the rain to taper and sunshine to increase, both typical for July and just what the crop needs.

The U.S.D.A. rated the corn crop in the 18 major states as of July 6 at 75% good to excellent, 20% fair and 5% poor to very poor, unchanged from a week earlier and compared with 68% good to excellent, 24% fair and 8% poor to very poor at the same time last year. The highest U.S. average corn yield on record was 164.7 bus per acre in 2009. The crop in the 18 states was rated 71% good to excellent, 21% fair and 8% poor to very poor on July 5 that year.

The U.S.D.A. in its Acreage report estimated 2014 corn planted area at 91.6 million acres, down 4% from 2013, and harvested area at 83.8 million acres, also down 4%. While the first survey-based corn yield and production estimates won’t come from the U.S.D.A. until the Aug. 12 Crop Production report, the weather-adjusted trend yield of a record- high 165.3 bus per acre used in the July World Agricultural Supply and Demand Estimates report would translate into 2014 corn production near 13,860 million bus, second only to record production of 13,925 million bus in 2013 when the average yield was 158.8 bus per acre and harvested area was 87.7 million acres.

The WASDE number is considered low by many analysts who see potential for a record large corn crop this year despite the sharp drop-off in planted and harvested acreage. The key will be yields.

Mr. Salmon said he expects a corn crop well in excess of 14 billion bus and nearer 15 billion bus this year, based on his proprietary crop model using the U.S.D.A. condition ratings as well as soil moisture and other parameters. His current average yield is above 175 bus per acre.

“They can’t still be thinking it’s just 13.9 billion bus,” Mr. Salmon said, referring to production estimates from the U.S.D.A. and others in the trade.

Paul Meyers, chief agricultural economist, Foresight Commodity Services, Inc., forecast the corn crop “right at 14 billion bus,” using the latest U.S.D.A. data, but said he was surprised the U.S.D.A. yield wasn’t higher.

“If we have favorable weather the rest of the summer, the yield will be above 167 bus an acre,” Mr. Meyers said. “I wouldn’t argue against a higher number.”

Understanding soybean trends

Favorable weather also will play a role in what is expected to be a record large 2014 soybean crop, but the oilseed also has record-high acreage going for it as farmers switched millions of acres from corn to soybeans as soybean values held up better than did corn prices during the decision-making period prior to planting.

The U.S.D.A. estimated 2014 soybean planted area at a record 84.8 million acres, up 11% from 2013, and forecast harvested area at a record 84.1 million acres, also up 11% from a year earlier. Using the U.S.D.A. average trend yield of 45.2 bus an acre in its July WASDE would put 2014 soybean production at a record near 3,800 million bus, up 16% from 3,289 million bus in 2013 and up 13% from the record outturn of 3,359 million bus in 2009.

As with corn, the U.S.D.A. soybean crop condition ratings are outstanding at this point in the season. The crop in the 18 major states was rated 72% good to excellent, 23% fair and 5% poor to very poor as of July 6, compared with 67% good to excellent, 26% fair and 7% poor to very poor at the same time last year and even better than 66% good to excellent, 26% fair and 8% poor to very poor on July 5, 2009, the year of record high production.

Mr. Salmon’s model puts 2014 soybean production just under 4 billion bus with a yield just over 47 bus an acre. But the soybean crop may be more vulnerable to weather than corn this summer. Since plantings were spread over a longer period, later planted soybeans were more at risk, he said.

Wheat crop continues to struggle

Much more is known about the wheat crop since survey-based winter wheat estimates have come from the U.S.D.A. since May. Winter wheat area seeded last fall for harvest in 2014 was 42.3 million acres, down 2% from a year earlier, with severe drought in southern portions of the hard red winter wheat region severely curtailing production with harvested area in Kansas, Oklahoma and Texas combined expected to be the second lowest since 1957. But farmers in the Upper Midwest (mainly) were expected to plant 12.7 million acres of spring wheat other than durum, up 10% from 2013, with harvested area of 12.4 million acres up 9%. Durum planted area was seen at 1.5 million acres, up slightly from 2013, with harvested area at 1.4 million acres, down slightly. As a result, total wheat planted area estimated at 56.5 million acres was up slightly from 2013, with harvested area forecast at 46.2 million acres, up 2%. Still, all wheat production in 2014 is expected to fall below 2013 due to losses in the southern Great Plains hard red winter region and lower soft red winter output.

The markets have responded to expectations of good weather and large crops with corn, soybean and wheat futures all falling sharply from highs mostly set in May. December corn futures below $4 a bu last week were down more than 20% from May highs and near a four-year low, November soybean futures below $11 a bu were down more than 10% and all three classes of wheat futures were down about 20% to 25% from May. Despite a smaller wheat crop, the market has been pressured by a lack of export demand, Mr. Meyers said.

Overall planted area in 2014 for 18 major crops included in the U.S.D.A. survey (with harvested area for three crops not planted annually) totaled 330.5 million acres, up 5.7 million acres, or 2%, from 2013. Planted area for all major oilseeds increased, as did area for oats, rice, spring wheat other than durum, upland cotton, dry edible beans and potatoes. In addition to corn, notable declines were seen in barley, rye, grain sorghum, winter wheat, millet and sugar beets with durum nearly unchanged.
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