As estimates of the U.S. corn and soybean crops continue to swell, so do anticipated supplies, which will continue to pressure prices, according to Jack Scoville, analyst with Price Futures Group, speaking at a Minneapolis Grain Exchange press briefing on USDA’s Sept. 11 Crop Production report.
USDA increased its forecast for corn and soybean production by 3 percent compared to last month’s report. Record yields for corn and soybeans are also forecast.
According to Scoville, production numbers “were at the high end of trade guesses for corn and soybeans. Ending stocks for corn came in at just over 2 billion bushels.
“We could see some further downside in corn over time. Usually, when we have big production years, the harvest lows tend to come later on in the crop year.”
USDA forecasts corn production at 14.4 billion bushels, up 3 percent from both the August forecast and from 2013. Based on conditions as of Sept. 1, yields are expected to average 171.7 bushels per acre, up 4.3 bushels from the August forecast and 12.9 bushels above the 2013 average. If realized, this will be the highest yield and production on record for the United States. Area harvested for grain is forecast at 83.8 million acres, unchanged from the August forecast but down 4 percent from 2013.
USDA raised feed usage for corn on lower prices, “however, there will be some questions on whether or not we have the animal numbers,” Scoville said.
Even with large corn supplies, Scoville doesn’t see corn below $3 a bushel.
Scoville believes that lower corn prices could reduce corn acres in South America next year, “but I don’t think we’ll see much in the way of reductions in soybean acreage.”
Soybean production is forecast at a record 3.91 billion bushels, up 3 percent from August and up 19 percent from last year. Based on Sept. 1 conditions, yields are expected to average a record high 46.6 bushels per acre, up 1.2 bushels from last month and up 3.3 bushels from last year. Area for harvest in the United States is forecast at a record 84.1 million acres, unchanged from August but up 11 percent from last year.
All cotton production is forecast at 16.5 million bales, down 6 percent from the August forecast, but up 28 percent from 2013. Yield is expected to average 803 pounds per harvested acre, down 2 percent from last year. Upland cotton production is forecast at 16 million bales, up 30 percent from 2013. Pima cotton production is forecast at 578,000 bales, down 9 percent from last year.
U.S. rice production is forecast at 218.3 million hundredweight, up from 189.9 million hundredweight in 2013. Forecast average yield decreased from 7,560 pounds to 7,501 pounds since last month. “Production is down considerably,” Scoville said. “I think that’s a surprise to the market. Certainly the yield reports have been great out of Texas and Louisiana.
“USDA did cut rice exports, all on the milled rice side. It was definitely a friendly report for rice.”