In a move that surprised most grain marketing experts, USDA increased the estimated final 2019 U.S. average yields for both corn and soybeans in its Jan. 10 crop production report.
USDA increased the estimated final average corn yield by one bushel per acre and increased the total production by 30 million bushels. It also increased the estimated average soybean yield by one-half bushel per acre, but kept the expected total production near the level in its November report.
The estimated total corn production is now 13.69 billion bushels, about 20 percent below 2018's 14.42 billion bushels and well below the 2016 record of 15.15 billion bushels. The average corn yield is estimated at 168 bushels per acre, which compares to 167 bushels per acre estimated in the November report. The 2019 yield compares to 176.4 bushels per acre in 2018, the record yield of 176.6 bushels in 2017, and 174.6 bushels in 2016.
The projected 2019 harvested corn acreage is 81.4 million acres, down slightly from 81.7 million acres in 2018.
The estimated soybean production is 3.56 billion bushels, down significantly from more than 4.4 billion bushels in both 2018 and 2017, as well as 4.3 billion bushels in 2016. USDA now estimates the soybean yield at 47.4 bushels per acre, compared to 46.9 bushels per acre in the November report. The yield is below 50.6 bushels per acre in 2018, 49.3 bushels in 2017, and the record U.S. soybean yield of 52.0 bushels in 2016.
The 2019 harvested soybean acreage is 75 million acres, down 14 percent from 87.6 million acres in 2018.
Minnesota is expected to have a final 2019 corn yield of 174 bushels per acre, an increase by 4 bushels from the November estimate, but 8 bushels below the 2018 yield of 182 bushels per acre. It's also lower than the record yield of 194 bushels per acre in 2017, 193 bushels in 2016, and 188 bushels in 2015.
The Iowa corn yield is estimated at 198 bushels per acre, an increase of 6 bushels from the November estimate, and compares to 196 bushels per acre in 2018, 202 bushels in 2017 and the state record of 203 bushels per acre in 2016.
Iowa, Missouri and Kansas were the only Midwestern states projected to have a higher estimated corn yield for 2019 than the 2018 yield.
Other estimates for 2019 average corn yields are Illinois at 181 bushels per acre, compared to 210 bushels in 2018; Indiana at 169 bushels, compared to 189 bushels in 2018; Nebraska at 182 bushels, compared to 192 bushels in 2018; South Dakota at 145 bushels, compared to 160 bushels in 2018; and North Dakota at 141 bushels;, compared to 153 bushels in 2018.
Minnesota's estimated soybean yield is 44 bushels per acre, compared to 49 bushels in 2018, 47.5 bushels in 2017, and the record yield of 52 bushels in 2016.
Iowa's soybean yield is estimated at 55 bushels per acre, compared to 56 bushels in 2018, 57 bushels in 2017 and the 2016 record yield of 60 bushels.
Other projected state soybean yields are Illinois at 54 bushels per acre, compared to 63.5 bushels in 2018; Indiana at 51 bushels, compared to 57.5 bushels in 2018; Nebraska at 58.5 bushels, compared to 58 bushels in 2018; South Dakota at 42.5 bushels, compared to 45 bushels in 2018; and North Dakota at 32 bushels, compared to 35 bushels in 2018.
USDA supply and demand report
The monthly USDA World Supply and Demand Estimates (WASDE) Report was also released on Jan. 10, which is likely to impact corn and soybean markets in the coming months.
The WASDE Report showed lower overall 2019-20 U.S. corn supply estimates than existed in 2018-19, as well as a slight decrease in total corn demand levels for the coming year, resulting in a reduction in the projected corn carryout levels by the end of the 2019-20 marketing year. Total demand for corn usage in 2019-20 was lowered by 158 million bushels from 2018-19 levels, primarily due to an expected reduction in the export levels for the coming year, which was somewhat offset by an expected increase in corn used for feed in the coming year. Corn used for ethanol production in the current year is projected to remain very similar to a year earlier.
USDA is now estimating 2019-2020 U.S. corn ending stocks at 1.89 billion bushels, down slightly from the December WASDE report. This compares to carryout levels of 2.11 billion bushels in 2018-19, 2.14 billion bushels in 2017-18 and 2.29 billion bushels in 2016-17. The U.S. corn carryout to use ratio would be at approximately 13.4 percent for 2019-20, which compares to 14.6 percent for 2018-19, 14.5 percent in 2017-18 and 15.7 percent in 2016-17.
This means there could be some potential for short-term rallies in the cash corn market in the coming months, especially in areas such as portions of the Upper Midwest that had below average corn yields in 2019.
The 2019-20 soybean ending stocks were estimated at 475 million bushels, the same level as the December report, but down significantly from the 2018-19 ending stocks of 913 million bushels. The projected 2019-20 soybean ending stocks are quite similar to the carryout level of 438 million bushels that existed in 2017-18; however, they are still considerably higher than the ending stock levels of 302 million bushels in 2016-17 and 197 million bushels for 2015-16.
The soybean carryout-to-use ratio for 2019-20 is estimated at 11.5 percent, which is down considerably from 23 percent for 2018-19. Soybean demand for 2019-20 is projected to increase slightly compared to a year earlier, due to expected small increases in both the soybean crush and export levels.
The expected large decrease in soybean ending stocks may offer some opportunities for improved soybean prices in the coming months, especially if there are increased soybean sales to China resulting from some potential resolution to the ongoing trade situation between the U.S. and China.
USDA is currently estimating the U.S average on-farm cash corn price for 2019-2020 at an average of $3.85 per bushel, which is unchanged from the December estimate and would be at the highest price since the 2013-14 marketing year. The 2019-20 price estimates are the expected average farm-level prices for the 2019 crop from Sept. 1, 2019, to Aug. 31, 2020; however, they do not represent estimated prices for either the 2019 or 2020 calendar year. The projected USDA average corn price of $3.85 per bushel for 2019-2020 compares to national average corn prices of $3.61 per bushel for 2018-19, $3.36 per bushel for both 2017-18 and 2016-17, and $3.61 per bushel for 2015-16.
USDA is projecting the U.S. average farm-level soybean price for the 2019-2020 marketing year at $9.00 per bushel, which is an increase of $.15 per bushel from the December estimate. The $9 price compares to $8.48 per bushel for 2018-19, $9.35 per bushel for 2017-18, and $9.47 per bushel in 2016-17.
Kent Thiesse is a farm management analyst and senior vice president for MinnStar Bank, Lake Crystal, Minn.