In most instances, when USDA projects a large crop for a given year, it usually gets even bigger as the crop is being harvested. This was certainly the case with the recently released Nov. 10 USDA Crop Report, which featured major increases in the expected 2015 U.S. corn and soybean production for 2015. USDA increased corn production by 99 million over the October estimate, while 2015 soybean production was increased by 93 million bushels compared to a month earlier. USDA is estimating record corn yields in 11 states, and record soybean yields in 10 states, including in Minnesota and Iowa for both crops. The estimates in the latest USDA report far exceeded most grain industry projections, and has set a very negative tone for the grain markets heading into 2016.
The latest USDA report estimates the total U.S. corn production for 2015 at just under 13.7 billion bushels. This compares to the record U.S. corn production level of 14.2 billion bushels in 2014, 13.8 billion bushels in 2013, 10.8 billion bushels in 2012, and 12.4 billion bushels in 2010. USDA is now estimating that the 2015 national average corn yield at 169.3 Bushels per acre, which is an increase of 1.3 bushels from the October yield estimate of 168 bushels per acre. The 2015 corn yield estimate compares the record U.S. corn yield of 171 bushels per acre in 2014, 158.1 bushels per acre in 2013, 122.3 bushels per acre in the drought year of 2012, and147.2 bushels per acre in 2011.
The November 10 USDA report estimated total 2015 U.S. soybean production at the record level of 3.98 billion bushels, surpassing the previous record production of 3.93 billion bushels in 2014. The 2015 soybean estimate compares U.S. soybean production levels of 3.36 billion bushels in 2013, 3.03 billion bushels in 2012, and 3.09 billion bushels in 2011. USDA is now estimating the average 2015 U.S. soybean yield at a record level of 48.3 bushels per acre, which was an increase of 1.1 bushels above the October estimate of 47.2 bushels per acre. The 2015 expected national average soybean yield compares to the previous record yield of 47.5 bushels per acre in 2014, 44.0 bushels per acre in 2013, 39.6 bushels per acre in 2012, and 41.9 bushels per acre in 2011.
Based on the Nov. 10 report, USDA is estimating the 2015 Minnesota corn yield at the record level of 187 bushels per acre, which compares to 156 bushels per acre in 2014 and 160 bushels per acre in 2013. The previous record Minnesota average corn yield was 177 bushels per acre in 2010. USDA is projecting Iowa to have a record corn yield of 189 bushels per acre in 2015, which compares to178 bushels per acre in 2014 and 165 bushels per acre in 2013. The previous record Iowa statewide corn yield was 182 bushels per acre in 2008. Illinois is projected to have a 2015 corn yield of 168 bushels per acre, compared to a record yield of 200 bushels per acre in 2014. Other estimates for 2015 average corn yields are Indiana at 156 bushels per acre, compared to 188 bushels in 2014, Nebraska at 187 bushels per acre, compared to 179 bushels per acre in 2014, and South Dakota at a record level of 162 bushels per acre, compared to 148 bushels per acre in 2014.
USDA is estimating the 2015 Minnesota soybean yield at the record level of 50 bushels per acre, which compares to 41.5 bushels per acre in 2014. The previous State record soybean yield was 45 bushels per acre in 2010. The 2015 Iowa soybean yield is estimated at the record level of 56 bushels per acre, compared to 51 bushels per acre in 2014. Other projected state soybean yields for 2015 are Illinois at 56 bushels per acre, which is the same as 2014. Indiana at 51 bushels per acre, compared to 55.5 bushels per acre in 2014, Nebraska at 56 bushels per acre, compared to 54 bushels per acre in 2014, and South Dakota at 46 bushels per acre, compared to 45 bushels per acre in 2014.
Supply and demand report
The monthly USDA WASDE Report released on Nov. 10 was quite bearish for both corn and soybean market prices in the coming months. The report indicated slightly lower overall U.S. corn production estimates for 2015, compared to 2014; however, much higher corn production levels than expected by the grain industry. Total demand for corn usage in the coming year was decreased from the October estimate, and was below 2014-15 usage, primarily due to projected reductions in corn exports and corn used for ethanol production. USDA is now estimating 2015-2016 U.S. corn ending stocks at 1.76 billion bushels, which was a significant increase over the October estimate of 1.56 billion bushels. The estimated 2015-16 corn supply levels compare to 1.73 billion bushels in 2014-15, and 1.23 billion bushels for 2013-14. The large projected 2015-2016 corn carryover stocks will likely prevent significant rallies in the corn market during the next few months.
The projected soybean ending stocks in the November report were estimated at 465 million bushels, which was increased from the October estimate of 425 million bushels. This compares to ending stocks of only 191 million bushels for 2014-15, and 92 million bushels for 2013-2014. The projected 2015-2016 soybean ending stocks would be the highest level in several years, with the soybean stocks-to-use ratio now estimated at 12.4 percent, compared to only 4.9 percent in 2014-15. Soybean demand is estimated to be lower in 2015-16 compared to a year earlier, primarily due to reduced export levels. This combination will likely put pressure on soybean market prices as we move into 2016.
USDA is currently estimating the U.S average on-farm cash corn price for 2015-2016 in a range of $3.35-$3.95 per bushel, or an average of $3.65 per bushel, which is down $.15 per bushel from the October estimated average price. USDA is projecting the U.S. average soybean price for 2015-2016 in a range of $8.15-$9.65 per bushel, resulting in an average soybean price of $8.90 per bushel, which is down $.25 per bushel from the October estimate. It is important to remember that the 2015-16 USDA price estimates are the expected average farm-level prices for the 2015 crop from Sept. 1, 2015 to Aug. 31, 2016, and are not estimated prices for the 2015 or 2016 calendar year.
The projected USDA average on-farm corn price of $3.65 per bushel for 2015-16, compares to an average corn price of $3.70 per bushel for 2014-15, $4.46 per bushel for 2013-14, and $6.89 per bushel for 2012-13. The USDA soybean price estimate of $8.90 per bushel for 2015-16, compares to $10.10 per bushel for 2014-15, $13.00 per bushel for 2013-14, and $14.40 per bushel for 2012-13. The increasing supplies of both corn and soybeans are expected to keep grain price rallies at more moderate levels in spring 2016, as compared to other recent years.