USDA reduces US corn and soybean outlook but farmers will reap record-large corn harvest

Farmers in the United States are expecting to harvest a record corn crop, even though the U.S. Department of Agriculture lowered slightly its forecast on Friday for U.S. soybeans and corn, the first official estimates of these two crops of the country since mid-September before the harvest began. The grain and soybean markets fell, as traders expected the government would forecast deeper cuts in the nation's crop. USDA, however, reported that supplies of corn were increasing more than consumption. The USDA slightly reduced its U.S. soy export estimate for this crop season, as China, which is the top importer of American soybeans, has shunned American shipments due to the trade wars between Washington, D.C., and Beijing. The longest U.S. shutdown in history led to a blackout of crop data, which caused analysts to estimate corn and soybean yields at the highest levels they have ever seen.

FUNGAL DISEASE SPREAD MIDWEST

The USDA estimated that the average corn yield in 2025 for the United States will be 186.0 bushels/acre, a decrease from 186.7 bushels/acre on September 12. The USDA lowered their production estimate from 16,814 billion bushels in September to 16,752 billion. USDA's crop production report stated that if realized, the United States would have the highest grain production ever. The report was expected to show large supplies after USDA forecasted that U.S. Farmers would harvest the largest acres of corn in the United States since 1933. This news weighed down on prices, and also came as a blessing to livestock producers and ethanol manufacturers who use the crop as feed. Traders and analysts expected that the government would cut its estimate of corn production more dramatically on Friday. Growers and crop specialists said that corn fungal disease has spread throughout the Midwest of the United States, threatening yields.

Analysts polled had expected that the agency would cut its production forecast to 16.55 billion bushels, and its yield outlook to 18 bpa.

Jim McCormick is the co-founder and marketing consultant of AgMarket.net.

The grain glut will likely weigh on the agricultural economy. U.S. farmers have been already struggling to cope with low crop prices, and increasing costs of inputs like fertilizer and seed. The forecast for cash crop receipts, adjusted for inflation, is the lowest since 2007. The USDA forecasts that the U.S. soybean yield in 2025 will be 53.0 bpa. This is down from 53.5bpa projected in September. Production was forecast at 4.253 million bushels. This is down from the previous estimate of 4.301 million bushels. Analysts expected that the USDA would lower its outlook for soy yield to 53.1 bpa with production at 4.266 bb bushels.

Craig Turner, a commodities and grain broker at StoneX, also said that forecasts of a large wheat carryout cast a negative light on the grain markets. Turner explained that if corn or soybeans rally too much it will mean there is plenty of winter grain available as feed at some point. It's the rally-capper.

(source: Reuters)