Cash Field Crop
It was a great growing year for much of the U.S., which means abundant supplies of grains and oilseeds. USDA estimates the national average corn yield at 178.9 bu/acre, a record that exceeds last year’s yield by more than two bushels. This is expected to result in a national corn crop of 14.6 billion bushels. Soybean yields are also projected to break records, estimated at 52.1 bu/acre, which would yield 4.60 billion bushels, 189 million more than last year.1
- Both domestic and foreign demand for corn has been strong, but long supplies will likely limit price increases. World corn production increased by 23.7 million tons, or 2.2%, largely due to major increases in Ukraine and the EU.
- Weak ethanol margins are reducing demand for corn from that sector.
- The record soybean crop comes at a time of escalating trade disputes with China, the U.S.’s largest export customer. This has resulted in a loss of billions of dollars of value for the crop, with prices at or near decade lows. Soybean exports to all customers fell by 28 percent in the third quarter. Some feel that given China’s large dependency on American soybeans, markets may have over-corrected, and their buying will either come back, or U.S. growers may find new customers as China consumes South America’s crop. China has options to draw down stocks, however, by adjusting animal rations to reduce soybean meal content. This may limit U.S. price recovery and could disrupt soybean exports to China well into the future.
- Recent talk of an informal agreement with China made at the G-20 summit to buy more U.S. soybeans caused a rally in futures markets, but it is unclear whether actual shipments have taken place.
- USDA forecasts corn prices for the 2018/19 market year at $3.25-3.95 (2017/18: $3.36), and soybeans at $7.85-9.35 (2017/18: $9.33).
- Reports from New York indicate that it was a good growing year and yields were good, however, wet fall conditions caused quality concerns and some problems harvesting the crop.
1 USDA / WASDE://www.farmcrediteast.com/News/media-center/press-releases/20170505MayKEP#BenchmarkingToProfits17" target="_blank">Benchmarking Can Show the Way to Higher Profits