USDA Crop Report – Corn
The USDA Crop Report issued on August 11 came in with a slightly larger than expected crop production estimate for the 2006 corn crop in the U.S., but with a slightly lower total production estimate than the near-record corn production in 2005. USDA estimated the 2006 corn crop at 10.976 billion bushels, which is down from 11.112 billion bushels in 2005, and well below the U.S. record corn production of over 11.8 billion bushels in 2004.
The August estimate is slightly higher than most private analysts estimated. USDA is projecting a national average corn yield of 149 bu./acre, which is up slightly from the 2005 national average yield of 147.9, but is down considerably from the record average yield of 160.4 bu./acre in 2004. The significant projected yield reductions and corn production decreases in the August report were largely due to continued drought in parts of Western Corn Belt, which includes many areas of central and northern Minnesota. Certainly, continuation of the hot, dry weather pattern could result in expansion of the drought area in the Midwest, and result in further yield reductions. However, much of Corn Belt has good to excellent yield prospects for the 2006 corn crop. The higher than expected corn estimate has had an impact on corn prices on the Chicago Board of Trade (CBOT) and local corn market bids. CBOT corn bids for “new crop” corn closed down 14 cents after the Crop Report was released.
The USDA Soybean Report on August 11 was slightly below grain trade estimates. USDA now projects the 2006 U.S. soybean crop at 2.928 billion bushels, which compares to 3.086 billion bushels in 2005, and a record total U.S. soybean production of 3.141 billion bushels in 2004. The projected lower U.S. soybean production for 2006 is due to projected reduced yields in some areas due to drought conditions. The U.S. average soybean yield for 2006 is estimated at 40.7 bu./acre, which compares to 43.3 bu./acre in 2005. The lower yield is offset by the fact that there are 2.8 million more planted acres of soybeans in the U.S. in 2006, as compared to 2005. The slightly lower 2006 production estimate is having very little impact on CBOT futures prices or local cash soybean prices, due to the rather large carryover inventory of soybean stocks that currently exists in the U.S.
Near-Record July Heat
Nationally, July 2006 was the second hottest month ever recorded, with an average temperature of 77.2 degrees F, which is 3.2 degrees above the long-term average July temperature nationwide. Only the average July temperature in the “Dust Bowl” year of 1936 had a higher average temperature, at 77.5 degrees F. In addition, this July was driest on a national basis since July, 2000. For the May, June, July period on a national basis, 2006 was third hottest behind 1934 and 1936, and was the driest year since the drought-year of 1988. Many climatologists have predicted the current erratic agriculture weather patterns that we have been experiencing across the U.S. in the past couple of years. Many feel this erratic weather pattern may continue for a few years in the future.Editors 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 firstname.lastname@example.org.