Recent reductions to U.S. crop production forecasts could hang over the markets throughout the harvest season, barring a major adjustment this month.
Weather-related crop output issues and fewer harvested acres than expected caused USDA to cut national production estimates by 415 million bushels for corn and 152 million bushels of beans in September.
“We’ve moved tighter supplies and uncertainty a little farther out in time because we shrunk U.S. production,” Seth Meyer, USDA chief economist, said during the AgriPulse Ag Outlook Forum in Kansas City.
The national crop yield estimates currently sit at 172.5 bushels per acre for corn and 50.5 bushels for soybeans, down 2.9 and 1.4 bushels, respectively, from the previous month. USDA releases its next crop production report Oct. 12.
The Ag Department subsequently reduced ending stocks by 169 million bushels for corn, to 1.2 billion bushels, and by 45 million bushels of beans to 200 million in September. And that could keep pressure on the markets even as crops roll in this harvest.
“We’ll end this marketing year with tighter stocks for many commodities,” Meyer said. “We’re tightening up these markets around the world.”
The U.S. corn harvest is currently projected to total 13.9 billion bushels while total corn use is estimated at 14.3 billion bushels.
Elsewhere, even with a grain deal in place, Ukraine has been able to ship about 3 million metric tons of grain monthly, about half its normal export pace.
“This continues to overhang the market, unless there’s an ability to ship more grain (from the Black Sea region),” Meyer noted. “We’ve got a record amount of volatility in the wheat market and a lot in the corn market as well.”
Extreme volatility in the commodity markets combined with rising input costs are creating even more economic uncertainty for the year ahead.
“There’s a lot of questions where prices and input costs will go from here,” Meyer said. “There’s a tremendous amount of anxiety.”
Quarterly stocks estimates variable
USDA’s quarterly stocks estimates released Sept. 30 came in well below trade expectations for corn, at 1.37 billion bushels. Quarterly soybean stocks as of Sept. 1, 274 million bushels, were about 30 million bushels more than the trade expected while wheat stocks were in line with expectations at 1.77 billion bushels.
USDA also revised its yield estimate of last year’s corn crop from 177 bushels per acre down to 176.7.
The supply side for 2021/22 corn effectively lost 152 million bushels from the combination of lower production and stocks estimates, according to Scott Irwin, University of Illinois Laurence J. Norton chair of agricultural marketing.
Meanwhile, USDA’s small grains summary released Sept. 30 pegged the 2022-23 wheat crop at 1.65 billion bushels, about 7% below trade expectations.