The U.S. corn stockpile has fallen to the lowest level in three years with little hope that this year’s diminished and delayed harvest will make up the difference. In a pair of government reports, the data made clear that the rainiest spring in a quarter-century had taken a toll. The soybean stockpile also is markedly smaller than expected, although it is still the largest on record.
Corn and soybeans are the most widely planted crops in the country and are the foundation for much of the American diet. They are used as rations for livestock production and are ingredients in a plethora of packaged foods. Abundant harvests have helped keep food inflation low.
One analyst said that if corn yields, already forecast to run 5 percent below last year, fall further this year, the United States could face lean supplies in the near term.
“Today’s numbers have significant implications for the 2019-20 #corn balance sheet,” said Arlan Suderman, chief commodities economist for trading hours INTL FCStone, on social media. Instead of the comfortable 8-week supply envisioned by USDA when the 2020 crop is ready for harvest, exporters, food processors, livestock feeders and ethanol makers would juggle a 38-day supply if corn yields fall by 2 bushels an acre, he said. Yields are forecast for 168.2 bushels an acre at present.
In its quarterly Grain Stocks report, the USDA pegged the corn stockpile at 2.114 billion bushels and soybean stocks at 913 million bushels as of Sept. 1, the start of the 2019/20 marketing year. The corn figure was 14 percent smaller and soybean figure was 9 percent smaller than USDA estimated at the start of the month. The figures, based on a survey of growers and an attempt to contact every grain warehouse, were far below trade expectations too.
“With corn, it looks like a disappearance story,” said Warren Preston, USDA’s No. 2 economist. The USDA said corn “disappearance,” or corn that was withdrawn from grain bins for consumption, from June through August, was a strong 1 billion bushels a month. It was the second-largest on record for the summer months.
“Today’s corn stock number was a shocker from any historical perspective,” said economist Scott Irwin of the University of Illinois on social media. The USDA estimate was 314 million bushels smaller than traders expected – one of the largest “surprises” in corn usage since the early 1980s, he said. “So, what caused such a big usage surprise for corn in today’s report? I can think of three factors. #1 Maybe better data at the farm level on flood-related losses earlier this year. #2 Over-estimation of last year’s corn crop. #3 Sampling error.”
The USDA reduced its estimate of the 2018 soybean crop by 2.5 percent, to 4.428 billion bushels – still the largest harvest ever, which resulted in a smaller “carry-over” on Sept. 1, after exports and other usage were subtracted. At the Chicago futures markets, corn prices surged to $3.88 a bushel, up 16-1/2 cents, and soybeans to $9.19-1/4, up 23 cents, based on the smaller stockpiles.
Only 43 percent of the corn crop is mature, 30 points behind average, said USDA in the weekly Crop Progress report. Eleven percent of the crop was harvested as of Sunday, compared to the usual 19 percent. Harvest was behind normal throughout the Midwest. In Illinois, the No. 2 corn state, 4 percent of the crop is in the bin, compared to the usual 30 percent for the end of September.
Farmers are forecast to reap 13.8 billion bushels of corn this year. It would be the smallest crop in four years and a drop of 620 million bushels from 2018.
Weather forecasters say average temperatures are likely for the Midwest and Plains during October with chances of above-normal precipitation in the Dakotas, Minnesota, Iowa, Wisconsin, northern Illinois and much of Michigan. Warm weather would aid crop maturity. Rain or snow can delay harvest or reduce yields.
Also on Monday, the USDA said wheat production totaled 1.96 billion bushels this year, up 4 percent from last year due to higher yields per acre. Growers harvested 1.3 billion bushels of winter wheat, the dominant variety, up 10 percent from 2018, with higher yields more than offsetting a 4 percent decline in plantings. The USDA said it will re-survey farmers who sowed durum and other spring wheat because unusually large portions of the crop were not harvested when it compiled data for the annual Small Grains report.
The Small Grains report is available here.
The Grain Stocks report is available here.