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USDA: Expect record corn, soybean harvest

By Staff | Aug 20, 2010

The U.S. Department of Agriculture crop supply and demand August field-based estimates were released last week showing corn and soybeans possibly reaching record breaking yields for 2010.

Darin Newsom, DTN senior analyst, said the numbers release Aug. 12 tend to gain a great deal of attention.

“These … estimates are the first field survey-based estimates we see so additional emphasis is put on these as being most accurate,” said Newsom.

Pat Hill, DTN markets editor, said corn production is now estimated at 13.365 billion bushels, which could be a record large crop with an expected national record yield average of 165 bushels to the acre.

“Compared to what analysts were guessing before the report, yields are a little bigger and so is production,” said Hill.

With expected record corn production, Hill said, the question is, what to do with it?

According to Hill, the USDA has raised the estimates of corn going for food, seed and industrial uses and a big increase in exports, as well.

Hill reported ending stocks for corn are now at 1.312 billion bushels, which is down 62 million bushels from last month’s estimates making the stocks-to-use ratio at 9.7 percent.

“It is interesting the way they were able to offset the record production with increased demand,” said Newsom.

The decrease in the estimate of ending stocks appears to come from an increase in 2009 report from last year’s export demand.

“If ending stocks are as projected, we’re going to need every one of those bushels as the net result is still going to see another 100- to 110-million bushels coming off ending stocks from 2009-2010 going into 2010-2011.

“I thought, going into this report, (that) U.S. corn production was going to be the key. That may not be the case. We may be looking at ending stocks and demand issues taking precedent over some of these supply issues,” said Newsom.

He explained that there have been much debate going on over the fact if the 2010 corn crop is as good as it is projected.

Compared to previous record corn production years in 2004 and 2009, Newsom said, it appears the crop is right where it needs to be at this point in the growing season.

“So it certainly would lend some weight to the idea we could see at least, if nothing else, an above-trend line yield, but possibly a record yield,” he said. “It still seems like it might be quite a reach if we’ll hit 165 bushels to the acre this year. It seems a little iffy because we certainly do not have the other data to back this up.”

On the production side of the equation, as far as the report goes, Newsom said everyone seems to be looking for another record year for corn in 2010.

However, he added, “I think in the end, corn traders are going to focus on the fact that despite all of the changes that were made, despite the record production, ending stocks to use as we see it right now is going to come down, so ultimately I think that wins out.”

Hill noted the USDA soybean estimates are at 3.433 billion bushels, up from 3.359 billion bushels a year ago with soybean yields forecasted at 44 bushels to the acre.

Ending stocks remained unchanged at 360 million bushels with the percentage of ending stocks to use dropping to 11.1 percent.

USDA analysts, Hill added, are expecting some supporting action with those numbers predicting an average price for soybeans of $9.25 a bushel.

Newsom said that from a supply point of view, this soybean market is almost replacing what was seen in the wheat market a few years ago where huge supplies continue to build, offset at least partially with another record number in world and total demand.

Ending stocks for world demand, he said, are at 25 percent, which is down just a little bit from last year.

“There were only a few years that ending stocks were actually higher than it is right now and soybeans seem to have the least reason to be bullish right now,” said Newsom.

Contact Kriss Nelson at jknelson@frontiernet.net.

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