NAPERVILLE, Illinois, Sept 11 (Askume) – The latest government estimates of U.S. corn and soybean production are notorious for spooking grain markets and sometimes altering overall sentiment.
This is not the most likely outcome on Thursday, as crop estimates are already so high, but given near-term fundamentals, a potential supply boost may have an easier time of it for corn than for soybeans.
On average, analysts expect the USDA to forecast U.S. corn production at 182.4 barrels per acre on Thursday, down from 183.1 bushels in August and well above last year’s record of 177.3 barrels per day.
That would be an unusually modest change compared to August yields, as the average adjustment over the past few Septembers has been closer to 2 bpa. But trade rarely fully impacts September corn production, which has exceeded forecasts only twice in the past two decades.
However, the analysts’ margin of error is very low, as their corn production estimate is only 3 bpa, the lowest in at least two decades heading into this report. The overestimate of 183.5 bpa is very close to the USDA’s August production, which is an area of potential surprises that should be watched closely.
US soybean yields are expected to remain unchanged from August at 53.2 bpa. Over the past few years, the difference in soybean yields in September compared to August has averaged about 1 bpa.
Analysts expect soybean yields to be 2.9 bpa, well above average. The highest estimate of 54.9 provides additional coverage at higher levels.
Interestingly, USDA September corn production has not been below average trade expectations since 2015. USDA soybean production was above the trading average in each September from 2013 to 2021, but has been below expectations in the past two years.
Production Focus
Thursday’s corn and soybean production forecasts came in above expectations reported in August, pointing to increased easing of broader targets.
However, recent weather could be a hindrance, as last month was the driest August in the Midwest since 2013, and so far this month, much of the region remains very dry.
Crops have not been affected by extreme heat this summer, but temperatures will remain well above normal this week and next. As a result, some corn planted later may not load fully, which could reduce yields.
The USDA reduced planting and harvesting acreage for corn and soybeans last month, so this month’s acreage production may come as no surprise.
However, last month the USDA unexpectedly raised soybean acreage by 1 million acres from its June estimate, an unusually large directional move. It will be important to keep an eye on Thursday for any potential changes.
Corn and Beans
Higher production expectations reduce the likelihood that Thursday’s unexpectedly low output will reverse bearish market trends, although corn may be more likely to inspire optimism than soybeans.
When the USDA releases its first official 2024-25 estimates in May, US corn ending stocks are expected to increase by 4% from 2023-24, and soybean stocks are expected to increase by 31%.
But trade forecasts on Thursday showed US soybean ending stocks would rise 66% by 2024-25, while corn stocks would rise 8%.
US corn export demand is currently good compared to soybeans. Corn export sales for 2024-25, which began on September 1, are proceeding relatively normally.
But soybean sales have lagged behind the USDA’s export target, adding pressure to already large stock estimates. It’s unclear whether the agency is prepared to cut exports at this early stage if crop production doesn’t fall.
Chicago corn and soybean futures fell last week but remained slightly above the contract lows set last month. Thursday’s data could give traders an idea of whether these lows will hold or make new lows in the coming weeks.
Karen Brown is a market analyst at Askume. The views expressed above are her own.
The views expressed are those of the author. They do not reflect the views of Askume News, which is committed to integrity, independence and non-partisanship in accordance with the principles of trust.
