USDA lowers 2009 corn crop expectations slightly
USDA lowers 2009 corn
crop expectations slightly
The pace of corn harvest improved last week as drier weather has allowed farmers in some states to get back to the business of harvest. However, the progress still lags behind previous years and there is a chance that additional weather delays in the week ahead could further delay completion.
According to USDA, the near-record corn crop is 32 percent behind the last year’s harvest progress and 45 percent behind the five-year average pace. In Kansas, the crop is 68 percent harvested, compared to a five-year average of 93 percent complete. Farmers in Nebraska were 30 percent complete last week, 47 percent behind the average. In the Corn Belt, harvest is lagging anywhere from 45 points behind normal to 61 percent behind the normal pace in Illinois, according to USDA’s crop progress report released last Monday.
USDA said that soybean harvest numbers improved 24 percentage points to reach 75 percent complete as of Sunday, Nov. 8, 75 percent behind the five-year average. Meanwhile, corn harvest picked up 12 points to reach 37 percent complete, well behind the five-year average pace of 82 percent complete.
Perhaps the biggest surprise from USDA came on Tuesday last week in the form of USDA’s November World Agricultural Supply and Demand Estimate which showed only a small decline in expected corn crop yield. According to USDA models, average yield is now forecast at 162.9 bushels per acre, a drop of 1.3 bushels from October. Average yield forecasts declined by five bushels per acre in the states where harvest is the most delayed, Illinois, Iowa, and Mississippi. Farmers there are reporting declines in grain quality and test weights, which may eventually turn out to be greater than currently expected by USDA. Yield forecasts were increased in Colorado, Kentucky, Minnesota, Tennessee, and Washington. However, the agency increased their expectations for harvested acres and planted area to offset most of the expected drop in eventual harvest numbers which is expected to reach 12.92 billion bushels, a drop of 0.7 percent from last month’s report, but a 6.8 percent increase from last year’s production.
Soybean yield is expected to hit 43.3 bushels per acre, an increase of nearly one bushel per acre from last month’s forecast with the biggest increases expected in Kansas and Indiana where expectations increased three bushels per acre. Average yield estimates were lowered for Arkansas, Georgia, Mississippi, Texas, and for Iowa. Total U.S. production is expected to reach 3.32 billion bushels during the 2009/2010 crop year.
Despite the small change in numbers from USDA, there is still some concern that there could be big swings in the final corn production number as farmers continue to experience delays in harvest, according to American Farm Bureau Federation (AFBF) economists. Because of the delayed harvest, USDA’s December and January crop reports could show some significant adjustments compared to November, which is unusual they said. Usually there is little change between the November and January crop reports.
"Because of the late harvest, I would expect to see another drop in corn production in the January report. USDA’s January crop report will be watched a lot closer than normal because of the late harvest," said Terry Francl, AFBF senior economist. "The real concern over much of the country for corn is not yields, but quality and drying costs due to the wet weather. Particularly in Illinois, there are reports that yields are good but drying costs are up, which will put a real crimp on farm income."
USDA predicted a price range of $3.25-3.85 for the coming crop year, a decline of 12.6 percent from the 2008/2009 crop which averaged $4.06. Soybean prices were forecast in a range of $8.20 to $10.20, a decline of 7.7 percent from last year. However, analysts said last week that there could be some significant volatility in pricing ahead.
"The USDA will release final estimates of the size of the 2009 U.S. corn and soybean crops in the second week of January 2010. Price patterns will now reflect the pace of harvest, which has accelerated rapidly over the past 10 days, the progress of South American crops, and perceptions about the strength of demand," said Darrel Good, University of Illinois agricultural economist. "The declining value of the U.S. dollar, higher crude oil prices, and advances in the stock market have been encouraging for demand prospects. Still, soybean prices appear to be a bit over valued in light of the large South American crop prospects. Particularly puzzling is the movement from an inverse to a small carry in the futures price structure given prospects for large supplies next spring." — John Robinson, WLJ Editor