Corn production still on track for a record

U.S. corn growers remain on track for a record high 14 billion bushel production year, according to the Crop Production report, released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS).

“Today’s USDA report was a rare one indeed. Rare due to fact we have not had a monthly supply and demand report since September. The missing October report was due to the government shutdown the first two weeks of October,” said Doug Tenney, with Leist Mercantile. “Before the report came out, December CME corn was trading at $4.16 ½, down 4 cents. November CME soybeans were at $12.83 ¼, up 5 cents. At 12:35 pm, corn was up 3 cents while soybeans were up 20 cents.”

Based on administrative data, NASS revised the acreage planted to corn this season to 95.3 million acres, down 2% from the previous estimate. Despite the decrease, however, production forecast remained high due to high forecasted yields. This season’s yields are expected to average 160.4 bushels per acre, with corn growers in 18 states forecast to reach record yields this year. The weather also remains good for harvest so far this year, allowing growers to harvest 73% of the corn crop by Nov. 3, which is 2 percentage points ahead of the 5-year average harvest rate.

NASS also reduced the planted area for soybeans to 76.5 million acres, down 1% from the previous forecast. Just as with corn, however, favorable weather conditions account for higher pod counts compared with the 2012 yield. Soybean yields are expected to average 43 bushels per acre, with the final production forecast at 3.26 billion bushels. If realized, this will be the third largest production year on record.

“Overall, traders were looking for bearish corn numbers while bullish or friendly soybean numbers were expected,” Tenney said.

Corn production was estimated at 13.989 billion bushels, up 146 million bushels from September. Ending stocks were 1.887 billion bushels.

“The corn yield above 160 was a touch negative. However, two positives come from the corn numbers. Corn production was below 14 billion bushels and ending stocks did not reach 2 billion bushels,” Tenney said.

Soybean production estimation was up 109 million bushels from September. Ending stocks were 170 million bushels, up 20 million bushels. But with the higher production, demand also was increased. Exports were increased by 30 million bushels, crush was up 80 million bushels.

“Trade estimates before report release had corn production at 14.003 billion bushels. The corn yield was projected at 158.9 bushels per acre. The market has been trading a corn yield of 161 bushels per acre for at least the last week. Commercial grain sources thought the yield could be closer to 164. Still others think with the excellent growing conditions this summer that the yield could reach 170 bushels per acre. The record corn yield was 164.7 bushels in 2009. Overall, the market was looking for corn numbers at easy round numbers. Corn production was expected to be at 14 billion bushels with carryout at 2 billion bushels. Corn exports were thought to be moving higher with time. Just as a side note, earlier this week the EPA announced they could be setting new ethanol mandates, or renewable fuels mandates today as well,” Tenney said. “USDA and NASS typically have thousands of actual field samples as they compile yields for the October report. Those samples were lost and spoiled due to the shutdown. This put NASS in a quandary as to the best method to compile this report. Some had thought NASS could weigh farmer surveys of yields into USDA projection more than normal.”

“While this report was long anticipated, it is quickly behind us. Soybean demand continues to be strong. Look for the corn production number to increase with the final numbers being released in January 2014. Traders were short coming into the report. When we look at the report more in coming days, we will realize it was not bullish or bearish.”

NASS interviewed approximately 10,000 producers across the country in preparation for this report. In addition to farmer interviews, NASS also used its national and state level objective yield measurements to determine accurate yield and production forecasts.

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