Will smaller U.S. corn, soy crops shrink even further yet? -Braun
NAPERVILLE — Voted the least likely outcome in my Twitter poll last weekend, the U.S. government’s soybean yield estimate fell below the pre-report range of analyst predictions on Monday.
A much lower than expected soybean harvested area compounded losses for the U.S. crop, which the Department of Agriculture now pegs 153 million bushels or 3% lower than last month’s target. Soybean yield came in at 50.5 bushels per acre versus the trade expectation of 51.5.
USDA reduced U.S. soybean demand projections as a result of the smaller crop, though stocks-to-use in 2022-23 is set for a nine-year low of 4.5%. Chicago soybean futures jumped more than 5% on Monday to their highest levels since June.
Voters on Twitter had most heavily favored U.S. corn yield falling below the trade range, but USDA’s 172.5 bpa was bang on the analyst average. Those two numbers have not been identical in September in at least 18 years.
Along with soybean yield, harvested corn acres fell below the trade range, coming in a million acres lower than previously estimated. A much smaller cut had been expected for corn, but soybean acres were seen rising slightly. Planted acres also came in lower for both crops.
USDA’s statistical service usually revises acreage estimates in October, but the agency deemed the registration data sufficiently complete both this year and last to do the review in September.
The autumn revision has revealed lower soybean plantings than in June in six out of the previous eight years, and final plantings were even lighter in four of those six. Three of the previous eight corn plantings moved lower in the autumn review, but only one (2021) was even lower in the end.
The latest reduction to corn plantings was historically large at 1.2 million acres. Other large autumn planting cuts include 1.8 million acres in 2019 and 1 million in 2020, both years featuring planting hardships.
Shrinking corn crops do not necessarily get smaller from here. In the last 30 years, there have been just two years (1993, 2011) where final yield was below the September estimate after August and September yields both landed lower than in each previous month.
There have been eight total instances of lower corn yields in both August and September since 1992, including 2022, and the most recent time otherwise was 2012.
Final corn yield has been lower than in September 11 times in the last three decades regardless of the August or September directions. Final yield was higher than in September last year, but it was lower in the previous three.
Smaller crops getting smaller does work a little better for soybean yields using September as a baseline. September soy yield was lower than August in 12 of the previous 30 years, and final yield landed below the September outlook six of the 12.
In the previous five years, the September soybean yield direction was mixed with three up and two down. But last year was the only one among them where final yield was higher than in September.
One possible argument for the soybean yield to shrink in the coming months is that USDA’s pod counts this month were distinctly lower than in previous years with a similar yield projection. Either USDA is banking on those pods to fill, or it may need to find more pods in next month’s survey.
The latter is likely because the September counts tend to be the lowest of the season. That has been true for at least the past five years, which have included a couple notable September-October jumps.
But the separation between yield and pod counts may be too historically large to reach the current national projection. In that case, states outside the 11 USDA measures need to pull more weight than usual to support overall yield.
For corn, September ear counts tend to be the strongest of the season, though the fade is not usually extreme. USDA’s ear counts were similar to those found in 2020 when the final yield landed at 171.4 bpa, so the 172.5 makes sense in this context.
USDA’s next set of estimates is due Wednesday, Oct. 12. Karen Braun is a market analyst for Reuters. Views expressed above are her own. (Editing by Matthew Lewis)
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