U.S. farmers’ plans for a bin-busting corn harvest this year are being washed away by relentlessly rainy spring weather, said the USDA on Tuesday. It projected a corn crop that is 5 percent smaller than last year, foiling May predictions of the second-largest crop ever. In one month, the outlook for corn shrank by 1.4 billion bushels.
“Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects,” said USDA’s monthly WASDE report. Some 3 million acres won’t be planted to corn at all because soils are too saturated for fieldwork.
Due to an ongoing trade dispute with China, the U.S. soybean stockpile will exceed 1 billion bushels when this year’s crop is ready for harvest in late summer, the first time time the “carryover” was so large. With exports on the decline this trade year and next, the soybean carryover would again top 1 billion bushels when the 2020 crop is mature, equal to a three-month supply of the oilseed, said the USDA. Ordinarily, half of the soybean crop is exported.
Corn and soybeans are the two most widely planted crops in the country and in many ways are the foundation of the U.S. food supply as well as key sources of revenue for farmers. The crops are used in livestock feed, as ingredients in processed foods, and as raw materials for industrial applications that include biofuels.
The USDA projected the corn crop at 13.68 billion bushels, compared to 14.42 billion bushels in 2018. The initial projection for this year, which assumed normal weather and yields, was 15 billion bushels. Farmers planned to expand corn plantings this year as the more profitable alternative to soybeans in many regions.
The USDA said the corn stockpile would shrink dramatically in the year ahead because of the smaller crop now in the field. It forecast a season-average price of $3.80 a bushel for this year’s crop, the highest farm-gate price in six years. The strength in corn prices would prop up soybean prices as well, said the USDA, although soybeans still would sell for the lowest average price in 13 years.
With the corn supply tightening, a larger-than-usual portion of this year’s wheat crop will be diverted to livestock feed—140 million bushels instead of the usual 50 million bushels, said the USDA. The wheat crop is forecast at 1.9 billion bushels, slightly larger than the 2018 crop.
Although the USDA adjusted its estimates for corn plantings, yield, production and usage, it held steady on soybeans, “with several weeks remaining in the planting season.”
Corn futures prices surged in Chicago following the USDA data indicating a much smaller crop that traders expected. Corn for delivery in December rose by 12-1/2 cents a bushel prices, to $4.27-3/4. Soybeans for November delivery closed at $8.87 a bushel, up 1-1/4 cents.
On June 28, the USDA will release its annual Acreage report, based on a survey of more than 70,000 farmers. The Acreage report will provide the most comprehensive look yet by USDA at plantings and likely harvest area. The USDA will make its first estimates, based on a survey of growers and spot checks of fields, of the fall harvest in August. Until then, it makes projections based on historical patterns of acreage, weather and yields.
The Crop Production report for June is available here.
The World Agricultural Supply and Demand Estimates (WASDE) report for June is available here.