Corn
The USDA Crop Report issued on August 12 came in with a larger-than-expected crop production estimate for the 2008 corn crop in the U.S., which would make it the second largest U.S. corn crop in history, trailing only the 2007 total corn production of 13.1 billion bushels in the U.S. Based on Aug. 1 conditions, USDA is estimating the 2008 corn crop at almost 12.3 billion bushels, which is an increase of about 570,000 bushels from the July 1 estimated production of just over 11.7 billion bushels. The August estimate is slightly higher than the just-under 12 billion bushels that most private analysts estimated.
USDA is now projecting a national average corn yield of 155 bu./acre, which is up from a national average yield projection of 148.4 bu./acre on July 1, and is slightly higher than the 2007 national average yield of 151.7 bu. The projected yield increase compared to July 1 is due to greatly improved weather conditions in the primary corn-producing regions of the U.S., including Minnesota and Iowa. USDA is now projecting Iowa’s average corn yield at 171 bu./acre for 2008, which is the same as the 2007 average corn yield in Iowa. This seems rather interesting, given all the lost crop acres and poor growing conditions that existed in Iowa in early June, due to heavy rains and flooding. Minnesota’s average corn yield for 2008 is pegged at 165 bu./acre by USDA, which compares to an average corn yield of 146 bu. in 2007.
Soybeans
The USDA soybean report on August 12 was slightly below grain trade estimates, and slightly lower than the USDA estimate on July 1. USDA now projects the 2008 U.S. soybean crop at 2.973 billion bushels, which compares to 3 billion bushels estimated by USDA on July 1. However, the 2008 estimate is still well above the 2007 total U.S. production of just under 2.6 billion bushels. The U.S. average soybean yield for 2008 is estimated at 40.5 bu./acre, which compares to 41.2 bu. in 2007. The lower yield is offset by the fact that producers are expected to harvest over 10.5 million more acres of soybeans in 2008, as compared to 2007.
My Thoughts…
USDA increased the amount of planted corn and soybean acres in Iowa by about 100,000 acres from the June estimate, and increased the expected number of harvested acres by approximately 450,000 acres. This would seem to indicate that USDA does not feel that the damage from the heavy rains and flooding in early June was quite as severe as first thought. As is usually the case, time will tell the true story regarding the yield-loss impact of the flooding and heavy rains. Crop issues such as nitrogen loss, secondary crop diseases and later maturity usually do not surface until later in the growing season. Also, the 2008 USDA August crop estimates are probably a bit more iffy than in most years, given the fact that most of the 2008 corn and soybean crop remains five to 12 days behind normal development, based on accumulated growing degree units (GDUs) since May 1. Any incidence of a significant killing frost anywhere in the Midwest will likely have a significant impact the final corn and soybean yields, and will ultimately affect the total U.S. corn and soybean production for 2008.
Corn and soybean markets have been extremely volatile since the August 12 USDA Crop Report was released, being nearly limit-down one day, and reversing to nearly limit-up on the following day. Given the continued uncertainty of the 2008 corn and soybean crop, we are likely to more high volatility in the grain markets in the weeks ahead as situations and projections change.
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 kent.thiesse@minnstarbank.com.