The USDA supply and remand report released July 10 provided some fairly positive numbers for future corn and soybean prices. The report showed decreases in the projected ending stocks for corn in both the 2014-15 and 2015-16 marketing years. The report also verified the expectations for 2015 national corn and soybean yields in the U.S. to be below the record yield levels of 2014. Corn and soybean market prices have increased significantly in the past few weeks, which should help ease the very tight cash flow margins that existed for many farm operators in the Upper Midwest for the 2015 crop year.
Based on the July 10 report, USDA is projecting that 2015-16 corn ending stocks will be near 1.6 billion bushels by September 1, 2016, which is still a fairly large carryover level, but is reduced from the estimated carryover level of nearly 1.8 billion bushels a month earlier. The carryover level is based on 81.1 million harvested corn acres in the U.S. for 2015, and a U.S. corn yield of 166.8 bushels per acre. This compares to a record U.S. corn yield of 171.0 bushels per acre in 2014. Some marketing analysts feel that the USDA estimate for the 2015 national corn yield may be too high, given the poor growing conditions in the southern Corn Belt and Plains states; however, much of Minnesota and other northern Corn Belt States have good-to-excellent crop conditions. USDA is now projecting 2015-16 yearly average corn prices in a range of $3.45-4.05 per bushel, or an average of $3.75 per bushel, which is an increase from $3.50 per bushel in the June USDA estimate.
Earlier, the June 30 USDA Quarterly Grain Stocks Report listed total corn stocks available on June 1 at 4.45 billion bushels, which compares to 3.85 billion bushels in June 2014. The 2014-15 corn ending stocks are projected to be near 1.8 billion bushels, which compares to 1.2 billion bushels at the end of the 2013-14 marketing year, and only 821 million bushels at the end of the 2012-13 marketing year. USDA is estimating U.S. average corn price for the 2014-15 marketing year to be near $3.70 per bushel, which compares to$4.46 per bushel in 2014-14, and $6.89 per bushel for 2012-13.
Based on the June 30 USDA Acreage Report, U.S. soybean acreage for 2014 will reach a record level of 85.1 million acres, with 84.4 million acres being harvested. In the July 10 WASDE Report, USDA is projecting a record U.S. soybean yield of 46.0 bushels per acre in 2014, which compares to the record U.S. soybean yield of 47.8 bushels per acre in 2014. If achieved, that yield would lead to total U.S soybean production of 3.88 billion bushels in 2015, By comparison, total U.S. soybean production was 3.97 billion bushels in 2014, and less than 3.3 billion bushels in 2013. Again, some marketing analysts are questioning if the prevented planted acreage and poor growing conditions in states such Missouri, Kansas, Indiana and southern Illinois have been totally factored into the USDA projections.
USDA is now estimating soybean ending stocks at the end of the 2015-16 marketing year at 425 million bushels, which is still quite high, but was a reduction of 50 million bushels from the June estimate. The 2014-15 soybean ending stocks are estimated at 225 million bushels, which would compares to a carryover level of only 92 million bushels for 2013-14. USDA is estimating the average U.S. soybean price from September 1, 2015 through August 31, 2016 in a range of $8.50-10 per bushel, or an average of $9.25 per bushel. The estimated average soybean price for 2014-15 is $10.05 per bushel, which compares to $13 for 2013-14, and $14.40 per bushel for 2012-13.
Both old-crop and new-crop corn and soybean prices have reacted in a fairly bullish fashion to the crop acreage trends and the identified levels of grain stocks listed in the June 30 USDA reports, which was further substantiated by the July 10 WASDE Report. Chicago Board of Trade (CBOT) prices for December corn futures closed at $4.27 per bushel on July 10, which is an increase of 76¢ per bushel from $3.51 per bushel on May 29. December 2015 corn futures are at the highest level in 2015, and have increased by approximately 21% since late May of this year.
Local cash prices for new-crop 2015 corn have increased to near $4 per bushel at many locations in the Upper Midwest, which is near the breakeven level for many corn producers. The local cash corn price on July 10 for unsold 2014 corn rose to $3.80-3.90 per bushel at many locations in Minnesota, which compares to near $3.30 per bushel in late May. Many Minnesota farmers still had a considerable amount of corn in on-farm storage as of June 1, much of which was not priced. This rally in the market should help alleviate a significant financial loss to some farmers on their 2014 corn.
Soybean futures prices on the CBOT have also increased quite dramatically in recent weeks. CBOT soybean futures for new-crop 2015 soybeans closed at $10.22 per bushel on July 10, following the USDA report. This compares to $9.05 per bushel on May 29, and represents an increase of $1.17 per bushel in about five weeks. The 2015 harvest forward contract cash soybean price had increased to $9.60-9.80 per bushel by July 10 at many local grain markets in southern Minnesota, which compares to near $8.50 per bushel in late May. The cash price for remaining 2014 soybeans in storage has increased to more than $10 per bushel at processing plants on July 10, up from about $9.30 per bushel in late May.