On August 11 USDA came out with its August Crop Report and lowered its national average corn yield estimate for the 2011 U.S. crop to 153 bushels per acre, down dramatically from the 158.7 bushel trendline yield USDA had projected in July.
Now, Iowa State University Extension climatologist Elwynn Taylor is projecting an even lower U.S. corn yield. On August 15 Taylor updated his projection by releasing an estimate of 149 bushels per acre for the nation's crop.
"We're seeing a deterioration continuing in the nation's cornfields," says Taylor. "Iowa has some deteriorated places, but Iowa has some real garden spots too. I think the garden spots are going to hold up. Right now things look really good for their future this year. But in the areas of Iowa where corn plants already have their leaves firing up to the ear, they are done for this season."
Bean yield prospects in 2011 are tracking same way corn is: down
What about soybeans? It's still too early for Taylor to put a number on his soybean yield guess or at least to make his number public. He points out that bean yields depend so much on rain in August, during pod-filling time.
However, Taylor does give folks a hint. He says soybean yield prospects for 2011 are tracking about the same way corn is for the U.S. this year. "That's the way it's been for the last 5 years," he says. "My rule of thumb is if you don't know anything about soybeans, just say they are following corn yield prospects. That's been true the last five years when you look at the national numbers."
While Iowa's crop has slipped, U.S. crop is deteriorating even more
"The deterioration of this year's U.S. corn crop is a bit disconcerting," says Bob Snead, a farmer from Fairfield, a very dry area in dry southeast Iowa. "I've talked to a dozen farmers at the Iowa State Fair today. The smaller than anticipated crop this year and perhaps dramatically higher prices are causing some farmers to say we don't need that to happen. What we need is a crop."
Last month's unusually hot temperatures coupled with below average rainfall sent corn and soybean yield estimates down in USDA's August Crop Report. "USDA's monthly update for August is the first Crop Report for 2011 that is based on in-the-field estimates by trained crop enumerators," says Chad Hart, ISU Extension grain marketing economist. "In the August report, the numbers shifted quite a bit, coming in below expectations."
On acreage, USDA resurveyed some areas of the country and found fewer corn harvested acres (down 500,000), soybean planted acres (down 200,000), and soybean harvested acres (down 500,000). Most of these adjustments came from the Dakotas.
USDA lowered its corn demand projections for exports and ethanol
"As we wrap up the 2010/11 marketing year, USDA made some changes to it's projections for demand and ending stocks," says Hart. "For corn, export demand was lowered 50 million bushels and ethanol demand was lowered 30 million bushels. There was a partially offsetting increase other food, seed, and industrial use of 30 million bushels. But the end result is an increase in the 2010/11 ending stocks to 940 million bushels, up 60 million from last month. The 2010/11 USDA forecast for the season-average farm corn price held at $5.25 per bushel."
Hart adds, "For soybeans, export demand was decreased 25 million bushels and crush demand was lowered 5 million bushels. So 2010/11 soybean ending stocks come in at 230 million bushels, up 30 million. But as with corn, the season-average price for soybeans held steady, at $11.35 per bushel, in the August 11, 2011 forecast by USDA."
For the 2011 crop, corn yields are now estimated at 153 bushels per acre by USDA. That is down 5.7 bushels from last month and reflects the above average temperatures and below average precipitation much of the country faced in July.
Projected season average price for corn is higher, at $6.70 per bushel
"The changes in acreage and yield bring expected production below 13 billion bushels, to 12.914 billion for the 2011 crop," he says. "That is slightly below, but within the range of, pre-trade expectations. Demand is expected to decline as well. Feed demand was lowered 150 million bushels to 4.9 billion on higher corn prices and increased wheat feeding. Ethanol demand was reduced 50 million bushels on lower projected gasoline consumption. Export demand was lowered 150 million bushels."
Reductions in supply exceed the reductions in demand for corn. Thus, ending stocks are lower, projected to be at 714 million bushels as of August 31, 2012.
Also, the USDA's projected season-average farm price for 2011 crop soybeans is higher, with the midpoint at $6.70 per bushel, up 70 cents from last month.
Season-average soybean price is raised, midpoint is $13.50 per bushel
For the 2011 U.S. soybean crop, USDA's projected yields were decreased by 2 bushels per acre to 41.4 bushels in the August Crop Repot. Combined with the acreage reduction, this led to a 169 million drop in USDA's expected U.S. soybean production to 3.056 billion bushels in 2011, notes Hart.
On the demand side, crush demand was reduced 20 million bushels, according to USDA's numbers. Export demand fell 95 million bushels. With demands still exceeding production, ending stocks of soybeans are lowered to 155 million bushels for August 31, 2012. The season-average price estimate was raised by USDA, with a midpoint of $13.50 per bushel, up 50 cents from last month.
Hart adds, "Over the past couple of weeks, the market has been trying to figure out which was having the greater impact, the continued economic malaise weakening demand or the weather weakening supply. USDA numbers indicate Mother Nature is having the greater impact currently."