Corn Yield Shocker: USDA Drops National Yield to 177
USDA made a historic move with its May 12 World Agricultural Supply and Demand Estimates (WASDE) report. Before today, USDA had only lowered the national average corn yield from trendline in its May report five times, with 2013 being the most recent.
For 2022, USDA is projecting a national average corn yield of 177 bu. per acre. That is 4 bu. below the weather-adjusted trend presented at USDA’s Agricultural Outlook Forum in February.
USDA says this revision is due to the very slow start to planting in the major corn-producing states and the likelihood progress by mid-May will remain well behind normal.
“They probably did the right thing,” says Bill Biedermann, hedging strategist with AgMarket.Net. “But since this has not been their pattern, it is a surprise to a lot of us seasoned veterans in the industry.”
“I think the 177 number is more of a conservative number, but it definitely tightens things up,” adds Garrett Toay, principal with AgTraderTalk. “It’s going to mean USDA admits this crop will be behind the eight ball for the rest of the year and weather will be really important.”
Toay visits with AgDay's Clinton Griffiths:
World corn production is forecast to decline from last year’s record high, mostly reflecting reductions for Ukraine, the U.S., the European Union and China that are partially offset by increases for Brazil, Argentina, Serbia and South Africa. Read More: Brazil’s Drought: The Trigger that Could Take Corn Prices Higher?
The drop in corn yield sent prices higher after the report’s release, with May corn futures topping $8 per bushel again.
While that revision was bullish for corn prices, Ben Brown, University of Missouri Extension economist, says corn demand is more bearish.
Bearish Report for Corn
USDA’s forecast includes total U.S. corn use in 2022/23 to fall 2.5% on declines in domestic use and exports. Corn used for ethanol is unchanged relative to a year ago on expectations of flat U.S. motor gasoline consumption. Additionally, U.S. corn exports are forecast to decline 4% in 2022/23 as lower supplies and robust domestic demand limit prospects.
“When you take that into account and some of the demand changes that were made in new crop and then the lack of changes really in the old-crop numbers for corn, you have rather a bearish report,” Brown says.
The season-average corn price received by producers is projected at $6.75 per bushel, up 85¢ from a year ago and if realized the highest since $6.89 reached during 2012/13.
Soybean Numbers Up Across the Board
USDA’s soybean outlook calls for higher supplies, crush, exports and ending stocks compared with 2021/22. The soybean crop is projected at 4.64 billion bushels, up 5% from last year’s crop mainly on higher harvested area.
The 2022/23 U.S. season-average soybean price is forecast at $14.40 per bushel compared with $13.25 per bushel in 2021/22.
“Even though we’re looking at stronger supplies heading into the new crop that market remains tight,” Brown says.
Favorable Report for Wheat
In wheat, USDA expects reduced supplies, exports and domestic use stocks, which should lead to higher prices in the U.S.
For the global outlook, USDA forecasts lower supplies and consumption, increased trade and lower ending stocks.
“We continue to see some of the impacts of the conflict in Ukraine,” Brown says. “When we look specifically at Ukraine, the production for 2022/23 is down 33% from what's expected this year. So pretty favorable report overall for wheat.”
Looking ahead, Brown says, planting progress will be the focus of the grain markets. Read More: Historically Slow Start to Corn Planting Continues, Iowa and Illinois Only 14% and 15% Complete
Biedermann agrees. USDA may not adjust its national corn yields until the fall, but they could start to adjust the acreage estimate.
“The acreage number will probably come down and [USDA will] hold the yield steady until August, unless there’s significant weather threats,” he says.
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