COLUMNISTS

Focus on Ag: Minor changes in November USDA reports

Kent Thiesse
Farm Management Analyst
Kent Thiesse

The monthly USDA World Supply and Demand Estimates (WASDE) Report was released on November 9, which may have some impact corn and soybean markets in the coming months. The WASDE Report made minor adjustments to projected 2022-23 U.S. corn and soybean carryover estimates at the end of the current marketing year on August 31, 2023, as compared to estimates last month. The biggest surprise to the grain markets was a slight increase in the estimated corn and soybean production levels for 2022 compared to a month earlier, which resulted in slightly higher carryout levels for both corn and soybeans in the November WASDE Report.

Most grain marketing analysts viewed the latest USDA reports as somewhat “bullish” for future corn prices and “neutral” for soybean prices. December corn futures closed at $6.64 per bushel on the Chicago Board of Trade (CBOT) following the November 9 report, which compares to a price of $6.96 per bushel following the WASDE report on September 12 and to $5.55 per bushel following the November WASDE report in 2021. CBOT November soybean futures closed at $14.52 per bushel following the latest WASDE report, which was below the $14.88 per bushel price following the September report and compares to $11.38 per bushel following the WASDE report in November of 2021.

The 2022 national average corn yield is now estimated at the record level of 172.3 bushels per acre, which was increased from 171.9 in October. The 2022 harvested corn acreage in the U.S. was maintained 80.8 million acres, resulting in a total estimated 2022 corn production of 13.93 billion bushels. This compares to total U.S. corn production levels of near 15.1 billion bushels in 2021, 14.1 billion bushels in 2020 and to 13.6 billion bushels in 2019. Total corn usage for the 2022-23 year is now estimated at just over 14.175 billion bushels, which would be down from 14.956 billion bushels in the 2021-22 marketing year. Corn export levels and the amount of corn used for both feed and ethanol production during the current marketing year, which ends on August 31, 2023, were all reduced from corn usage levels during the 2021-22 marketing year.

USDA is now estimating 2022-2022 U.S. corn ending stocks at 1.182 billion bushels, which was 10 million bushels above the October estimate. This compares to carryout levels of 1.338 billion bushels in 2021-22, 1.24 billion bushels in 2020-21, and 1.99 billion bushels for 2019-20. Based on current estimates, the U.S. corn carryout to use ratio would be at 8.3 percent for 2022-23, which compares to 9.2 percent for 2021-22, 8.3 percent in 2020-21, and 14.4 percent in 2019-20. The continued tighter corn stocks could result in the potential for some short-term rallies in the cash corn market and continued tight basis levels at many locations in the coming months.

The 2022-23 U.S. soybean ending stocks in the recent WASDE Report were estimated at 220 million bushels, which was an increase of 20 million bushels compared to the October USDA report. The projected soybean ending stocks compare to 274 million bushels in 2021-22 and 256 million bushels in 2020-21; however, the projected 2022-23 carryout level is well below the ending stocks of 523 million bushels in 2019-20 and 913 million bushels in 2018-19. The soybean stocks-to-use ratio for 2022-23 is estimated at 5 percent, which is down from down from 6.1 percent on 2021-22 and well below levels of 11.5 percent in 2019-20 and 23 percent for 2018-19.

Total U.S. soybean production for 2022 was estimated at just under 4.346 billion bushels in the November report, which was increased by 33 million bushels from the October estimate and was slightly higher than the average grain trade projection. Total soybean demand for 2022-23 is projected at 4.414 billion bushels, which is down slightly from 4.465 billion bushels in 2021-22. The anticipated reduction in U.S. soybean demand in the coming year is primarily due to a decrease in the expected soybean export levels in 2022-23. The fact that soybean ending stocks remain fairly tight may offer some opportunities for short-term rallies for farm-level soybean prices in the coming months, especially if there are any weather-related production issues in South America.

Based on the November WASDE report, USDA is currently estimating the U.S average on-farm cash corn price for the 2022-2023 marketing year at $6.80 per bushel, which was unchanged from the October report. The USDA price estimates are the expected average farm-level prices for the 2022 crop year from September 1, 2022, to August 31, 2023; however, they do not represent estimated prices for either the 2022 or 2023 calendar year. The projected USDA average corn price of $6.80 per bushel would be the highest since 2012-13 following the 2012 drought. The 2022-23 estimated corn price compares to recent national average corn prices of $6.00 per bushel for 2021-22, $4.53 per bushel for 2020-21, $3.56 per bushel for 2019-20, and $3.61 per bushel for 2018-19.

USDA maintained the projected U.S. average farm-level soybean price for the 2022-2023 marketing year at $14.00 per bushel, which was also the same as the October estimate. The projected national average soybean price would be the highest in the past decade. The 2022-23 projected national average soybean price compares to prices $13.30 per bushel in 2021-22, $10.80 per bushel for 2020-21, $8.57 per bushel for 2019-20, $8.48 per bushel for 2018-19, and $9.35 per bushel for 2017-18.

USDA 2022 Corn and Soybean Yield Projections Below 2021 Yields

Based on the USDA Crop Production Report released on November 9, the projected U.S. average corn yield for 2022 will be 172.3 bushels per acre which was a decrease from the record U.S. corn yield of 177 bushels per acre in 2021. This compares to other recent U.S. corn yields of 171.4 bushels per acre in 2020, 167.5 bushels per acre in 2019, and 176.4 bushels per acre in 2018. The projected 2022 U.S. harvested corn acreage is 80.8 million acres is a decrease of 5.3 percent from 85.3 million acres that were harvested last year.

The November USDA Report increased the projected 2022 corn yields from the October report in Illinois by 5 bushels per acre, Indiana by 4 bushels, Iowa and North Dakota by 2 bushels per acre, and Minnesota by 1 bushel per acre. The latest USDA report left the projected corn yield unchanged from a month earlier in Wisconsin, while reducing estimated yield levels in Nebraska and South Dakota by 4 and 5 bushel per acre respectively. Minnesota is now projected to have a statewide average corn yield of 191 bushels per acre in 2022 compared to 177 bushels per acre in 2021, with Iowa are at 202 bushels per acre in 2022 compared to 204 bushels per acre in 2021. Other projected 2022 State average corn yields are Illinois at 215 bushels per acre, Indiana at 191 bushels per acre, Ohio at 186 bushels per acre, North Dakota at 143 bushels per acre, and Wisconsin at 182 bushels per acre. The drought-stricken States of Nebraska and South Dakota are projected at 168 and 125 bushels per acre respectively.

USDA is estimating the 2022 U.S. soybean yield at 50.2 bushels per acre, which is an increase of 0.4 bushels from the October estimate. The projected 2022 national average soybean yield compares to 51.7 bushels per acre in 2021, 51 bushels per acre in 2020, 47.4 bushels per acre in 2019, 50.6 bushels per acre in 2018, the record U.S. soybean yield of 52.0 bushels per acre in 2016. The 2022 harvested soybean acreage is projected at 86.6 million acres, which up slightly from the 2021 U.S. soybean acreage of 86.3 million acres; however, the 2022 acreage is well above the U.S. soybean harvested acreage of 82.6 million acres in 2020 and 74.9 million acres in 2019.

USDA is estimating the 2022 Minnesota soybean yield at 50 bushels per acre, which is up from 47 bushels per acre in 2021, while Iowa is projected at 59 bushels per acre in 2022, compared to a record 63 bushels per acre in 2021. Other States with strong soybean yields for 2022 include Illinois at 64 bushels per acre, Indiana at 59 bushels per acre, Ohio at 55 bushels per acre, Wisconsin at 54 bushels per acre, and North Dakota at 36 bushels per acre. The 2022 statewide yield estimate in drought-stricken Nebraska is projected at 50 bushels per acre, which compares to 63 bushels per acre in 2021, while the South Dakota yield is estimated at 39 bushels per acre in 2022, compared to 40 bushels per acre in 2021.

For additional information contact Kent Thiesse, farm management analyst and senior vice president, MinnStar Bank, Lake Crystal, Minn., at 507-381-7960 or kent.thiesse@minnstarbank.com.