The Agriculture Department estimates farmers will still produce more than 15 billion bushels of corn this year even as stretches of the heartland face dry weather that will lower yields.
USDA's monthly World Agriculture Supply and Demand Estimates report on Wednesday trimmed the nationwide corn yield to 177.5 bushels-per-acre, a four-bushel drop from the previous report.
But an increase in planted acreage stemming from the June 30 Acreage report, when USDA reported a 6% annual increase in corn acres to 94.1 million, offsets that reduction and puts USDA’s projected U.S. production at 15.3 billion bushels.
“According to data from the National Centers for Environmental Information, harvested-area-weighted June precipitation data for the major Corn Belt states represented an extreme downward deviation from average,” USDA noted in the report.
“However, timely rainfall and cooler than normal temperatures for some of the driest parts of the Corn Belt during early July is expected to moderate the impact of June weather.”
Allendale broker Mike Lung told Agri-Pulse traders were expecting a slightly larger cut to corn yield and plan to closely monitor that situation over the next month.
“We're really right in the thick of key pollination timeframe, so to make any kind of gigantic cut at this time for corn would be difficult to do,” he said. The August WASDE report, he noted, is “typically more of a market mover.”
The August report is the first of the season that is based on an extensive survey of crops.
The July WASDE report also incorporated the June Acreage report figures in the soybean market, which included a 4 million-acre drop to 83.5 million acres. With unchanged yield expectations, the total production expectations for U.S. soybean producers dropped 210 million bushels to 4.3 billion.
Lung attributed the unchanged yield expectations largely to the growth timeframe for soybeans, noting “beans really don’t determine pod fill and everything until we get to that August timeframe.” That unchanged yield also contributed to the bean ending stocks sitting at 300 million bushels, a drastic departure from earlier trade expectations and something Lung described as “the biggest shock of the report.”
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“We've got a big potential for a tight bean crop, which could see supportive nature for corn and wheat on that feed side of things and see some heightened prices as we go into that August timeframe,” he said.
The nation’s soybean plantings, Lung added, still have “another month ahead of them before that key yield determination timeframe, so we still got a lot of time for beans to either look great or look terrible.”
For many of the country’s row crops, Lung said recent rains were “definitely helping,” and while drought conditions are prevalent nationwide, many acres are still carrying viable production due to more moderate temperatures to this point.
“Really that's been the big divergence of this year than, say, 2012,” he said. “A lot of areas were dry early on this year, but the heat was not as intense as it was in years like that, so the crops been able to stay in a somewhat durable condition.”
USDA also boosted wheat production expectations to 1.7 billion bushels due to higher yields and harvested area, boosted rice production to 201 million hundredweight “primarily on higher harvested area” from the Acreage report and trimmed expectations for U.S. sugar production. Cotton exports were reduced, raising stocks as global trade is curtailed and U.S. acreage expands with West Texas rainfall “above median levels.”
Total meat production was raised as economists projected higher forecasts for beef, broiler and turkey production while pork slaughter was “fractionally lower.”
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