The October USDA crop reports are usually fairly uneventful, and most times just reinforce the data from the September report; however, the latest USDA report was totally different. The Crop Production Report released on Oct. 8 sent shock wavesthrough the grain trading industry, and had an immediate strongly bullish impact on corn and soybean markets. Recent USDA reports have lead to very wide movements in grain markets, which make it difficult for both grain producers and livestock producers to make risk management decisions.
The production report released on Oct. 8 decreased the expected U.S. corn production for 2010 by 4%, as compared to the Sept. 10 estimate. USDA is now estimating the total 2010 corn production at 12.66 billion bushels, compared to 13.16 billion bushels in September and 13.36 billion bushels in August. Total U.S. corn production was 13.1 billion bushels in 2009, and 12.1 billion bushels in 2008. The report on Oct. 8 estimated total soybean production in 2010 at 3.40 billion bushels, which is a slight decrease from the 3.48 billion bushel estimate in September.
USDA is estimating that the 2010 average corn yield in the U.S. will be 155.8 bu./acre, a 4% drop from the September yield estimate of 162.5 bu., and well below the record U.S. average corn yield of 164.7 bu. in 2009. The decreased U.S. corn yield expectations by USDA are due to some less-than-favorable weather conditions late in the growing season in some portions of the Corn Belt and the northern Great Plains. The average U.S. soybean yield for 2010 is now estimated at 44.4 bu./acre, which would surpass the record U.S. soybean yield of 44 bu. in 2009, but is down 0.3 bu. from the September estimate.
Based on the Oct. 8 report, USDA is estimating the 2010 corn yield in Minnesota at 175 bu./acre, 2 bu. below the September estimate, but is just above the 2009 record corn yield of 174 bu. (also set in 2005). USDA lowered the expected 2010 average corn yield in Iowa to 169 bu., compared to the September estimate of 179 bu., leaving the expected 2010 yield well below the state record corn yield of 182 bu. in 2008. Illinois is now projected to have a 2010 average corn yield of 160 bu./acre, which is a reduction of 16 bu. from the 174-bu. estimate in September. Corn yields for Indiana are now estimated at 160 bu., a decline of 10 bu. from the September estimate, while Nebraska corn yields for 2010 are estimated at 170 bu., which is down 9 bu. compared to the September estimate.
The Oct. 8 report estimated the 2010 Minnesota soybean yield at 45 bu./acre, tying the state record soybean yield set in 2005, and 5 bu. higher than the 2009 state average soybean yield. The projected 2010 Iowa soybean yield is a record 52 bu./acre, and compares to a final average yield of 51 bu. in 2009.
Based on the Oct. 8 Supply and Demand Report, USDA is now estimating 2010-2011 U.S. corn carryover stocks at 900 million bushels, which compares to 1.116 billion bushels in September, and represents a decrease of 31% from the Aug. 1 carryover estimate of 1.312 billion bushels. The projected 2010-2011 corn carryover would be less than 1 billion bushels for the first time in recent history, and would be the lowest in several decades. The expected 2009-2010 final corn carryover stocks are estimated at 1.708 billion bushels. The very low projected corn carryover stocks reflect the anticipated lower 2010 U.S. corn production, as well as increased corn usage for feed, ethanol and exports in the coming year. USDA is expecting 2010-2011 soybean ending stocks to be 265 million bushels, which is down from the September estimate of 350 million bushels, but well above the expected final 2009-2010 final soybean ending stocks of 151 million bushels.
USDA is currently estimating the U.S average cash corn price for 2010-2011 in a range of $4.60-5.40/bu., or an average of $5/bu., which is a significant increase from the September USDA average corn price estimate of $4.40, or the August average corn price projection of $3.80. USDA is projecting the U.S. average soybean price for 2010-2011 in a range of $10-11.50/bu., resulting in an average soybean price of $10.75, which is an increase of 85¢/bu. compared to the $9.90 estimated price in September.
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at email@example.com.