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Corn production in question, and that'll likely support higher corn prices

It seems obvious that USDA will have to reduce the U.S. corn yield in their September or October report. The drop will likely be around 3 bushels, which would take 270 million bushels off the already tight ending stocks estimate for corn.

A mid-season corn field butts up against a soybean field.
Corn yield looks like it could be disappointing in the U.S., while soybean production could be record high.
Erin Ehnle Brown / Grand Vale Creative LLC
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Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.

The fourth week of August had the grain markets posting gains across the board, reversing the direction from the previous week. The market was supported by the findings of the Pro Farmer Tour, which showed a much lower than expected yield potential for corn. The tour found a soybean crop that was in line with USDA’s estimates.

Now, granted, the Pro Farmer Tour is usually light on yield estimates when compared to the actual final yield, but this year’s difference per state is showing some red flags. When compared to USDA, the Pro Farmer corn yield was 21 bushels lower in Iowa, 12 bushels lower in Illinois, 22 bushels lower in Nebraska, 3 bushels lower in Minnesota, 11 bushels lower in Indiana, 29 bushels lower in South Dakota, and 16 bushels lower in Ohio. It seems obvious that USDA will have to reduce the U.S. corn yield in their September or October report. The drop will likely be around 3 bushels, which would take 270 million bushels off the already tight ending stocks estimate for corn.

The outlook for soybean production is a little harder to figure as the tour only does pod counts and those are difficult to covert to yield. In addition, the late season rains in a lot of regions helped improve the soybean potential while the rains were too late to help corn.

The Tour put the national average corn yield for the U.S. at 168.1 bushels versus USDA’s August projection of 175.4 bushels, a difference of 7.3 bushels. That puts corn production at 13.759 billion bushels versus USDA’s August estimate of 14.4 billion bushels, or roughly 641 million bushels less. If realized that would put the 2022 corn ending stocks estimate at 747 million bushels versus USDA’s August estimate of 1.388 billion bushels. The soybean national average yield came in at 51.7 bushels versus USDA’s August estimate of 51.9 bushels, making the soybean estimate a nonevent.


But what was interesting, September soybeans put in a new contract high on Aug. 26 due to strong export demand. Not only are the U.S. weather forecasts continuing to be friendly, so are Europe’s and China’s. The hot dry conditions have many expecting both of those regions will need to import more product to meet demand. This is already evident in soybeans are the past week over 1.3 million metric tons of soybeans were sold to either an unknown destination or China over the last 10 days of August.

The daily export sales reports list any sale over 100,000 metric tons. For sales less than that, we rely on the weekly export sales report. But USDA continues to struggle with their export sales report. It seems the new system of reporting was not ready for prime time, and as of now USDA has not released export sales since Aug. 18. USDA confirmed that no export sales report will be issued Sept. 1 or 8, but they were hopeful the report will be released Sept. 15. This is very concerning as corn and soybean’s export marketing year ended at the end of August. Poor timing on USDA’s part to try and improve a report.

Stats Canada released their August production estimate on Aug. 29. The report put all wheat production at 34.57 million metric tons versus expectations of 34 million metric tons and versus 21.6 million metric tons last year. Spring wheat production was estimated at 25.57 million metric tons versus expectations of 25.4 million metric tons and versus 16 million metric tons last year. Canola production was estimated at 19.499 million metric tons versus expectations of 19.6 million metric tons and 12.6 million metric tons last year. This report was neutral to negative wheat but friendly canola.

As mentioned, corn production appears to have some issues and will likely see further reductions by USDA. It’s not likely USDA will cut yield the 7 bushels as the Pro Farmer Tour indicated, but it is likely yield will drop around 3 to 4 bushels over the next couple months. This will likely support corn prices and prevent corn from selling off too much ahead of harvest. The trade is going to need to see much better than expected actual yield result to cause corn to stage a large selloff.

Soybeans, not so much. The U.S. has the potential to produce a record crop this year, followed by another potential record crop in Brazil and above average crop in Argentina. CONAB is estimating the 2023 Brazil soybean crop at 150.4 million metric tons versus 126 million metric tons last year and USDA’s August projection of 149 million metric tons. Brazil is expected to increase acreage 6%. Argentina is also expected to see higher soybean acres at the expense of wheat (due to dry conditions) and corn acreage (due to input costs). Abiove is also estimating the 2023 Brazil soybean crop at 151 million metric tons. Almost ideal weather conditions are helping the soybean crop get to the finish line as well, at least in the central and eastern Corn Belt, as more rain fell helping the soybean crop. On the flip side, the western Corn Belt is not expected to see much in the form of moisture for the next seven to 10 days. This will result in further deterioration of the crop in the western Belt.

The last week of August had the grains on the defense. Selling was tied more to economic concerns as Fed Chairman Jerome Powell did not do much to encourage optimism in his Jackson Hole speech. The main take away was that there is going to have to be more pain before the recession ends.

USDA’s Aug. 29 Crop Progress added pressure to the grains as the report was negative. Corn’s crop condition rating came in as expected at 54% good/excellent, down 1% from last week. Soybean’s crop ratings were 1% above expectations at 57% good/excellent, unchanged for the week. Spring wheat conditions were 4% above expectations at 64% good/excellent. Spring wheat harvest is at 50% complete which was 2% below expectations.

The end of August marks the month of setting crop insurance prices for wheat and barley. Spring wheat’s harvest price is estimated at $8.95 versus the base price of $9.19, a 2.6% decline. For barley, the harvest price is estimated at $5.47 versus the base price of $5.35, an increase of 2.3%.


For the southern Plains, we are halfway through establishing the base price of winter wheat. That price is estimated is at $8.67 versus $7.08 for 2022’s base price. This will encourage producers to look at planting winter wheat on the idea of harvesting early and then double cropping soybeans.

A market magazine conducted a farmer survey on 2023 planting intentions. There findings have 2023 corn acreage at 94.28 million versus 89.82 million this year, an increase of 4.46 million acres. Soybean acreage is estimated at 87.33 million versus 88.03 million in 2022, a decrease of 694,000 acres. All wheat acreage for 2023 is estimated at 48.84 million versus 46.99 million last year, an increase of 1.85 million. Winter wheat acreage is estimated at 36.55 million versus 34.01 million last year, an increase of 2.55 million. Spring wheat acreage is estimated at 12.29 million versus 12.99 million last year, a decrease of 697,000 acres.

Cattle wrapped up the fourth week of August posting small losses in the live cattle market and a mixed performance in the feeder cattle. USDA’s August Cattle on Feed report was negative and that started the cattle on the defense early in the week. Additional selling was tied to Powell's comments from Jackson Hole as the financial markets did not like what he had to say. The comments and many mentions to economic pain have the market thinking the Fed will increase rates another 0.75% in September. A lower cash trade and higher corn market added pressure. The long-term outlook for cattle is friendly, but short term we could see seasonal pressure.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

Opinion by Randy Martinson
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