U.S. farmers will plant less corn and soybean land than expected this year, despite a surge in commodity prices, suggesting that tighter grain supplies will persist into 2022, said the USDA on Wednesday. Although with normal weather and yields, the corn and soybean harvests could be the second largest ever, they will not be quite as large as projected by traders and the government.
U.S. farmers are looking at their largest corn crop ever and a near-record soybean harvest, with huge stockpiles of both crops persisting into fall 2021, said the USDA on Wednesday. Some 2.8 billion bushels of corn would remain in the bin when next year's crop is mature, the largest carry-over since the Reagan era.
Aided by the Sino-U.S. trade war, the U.S. soybean inventory doubled to a record 913 million bushels in one year, the government said on Thursday. At the same time, the USDA estimated that total will be cut in half by next September.
Three years of bumper crops collided with the Sino-U.S. trade war to create the largest U.S. soybean stockpile ever, a price-depressing 1 billion bushels at the start of this month. But by next Sept. 1, the so-called carry-over will be just two-thirds of its current size, estimated the USDA on Thursday.
The loss of nearly 6 million acres of corn and soybeans to a cold and rainy planting season this year will be felt into autumn 2020 and beyond, said the government on Thursday, as fat U.S. stockpiles will be drawn down to compensate for short crops.
U.S. farmers will harvest a sharply smaller soybean crop this year, driven away from the oilseed by weak market prices and a staggeringly large soy surplus resulting from a string of bumper crops. Even so, the International Grains Council projects the third year in a row of record-large soybean production globally.
Already-bulging U.S. corn and soybean stockpiles are much larger than expected, said a USDA report, compounding the effects of a trade war and bumper crops on the farm economy. Farm income this year is forecast to be the lowest since 2006.
From the EU to the Urals, drought is hurting wheat and barley crops, said the International Grains Council, forecasting the smallest world grain crop in three years and the smallest “carry-over” supplies in four years.
U.S. farmers intend to sow 3 million fewer acres of corn and soybeans this year than in 2017, said the USDA. The surprising development could draw down overly abundant U.S. stockpiles and bolster weak commodity prices.
U.S. grain bins hold the largest stockpile of corn in three decades — 32-percent larger than a year ago — and there will be little chance to reduce it given that a bumper crop is being harvested this fall. The outlook suggests comparatively low market prices through late 2018 at a minimum, possibly adding to pressure for larger federal supports as Congress writes the new farm bill.
Despite a run of record soybean harvests in the U.S., surging demand from China and other importers is expected to cause the U.S. stockpile to drop below the previous year's level for the first time in three years, Bloomberg reports. "Since 2005, China’s imports of the commodity have more than tripled, and it now buys more than 60 percent of the world’s exports," the news service says. "The demand is primarily driven by its livestock sector as a growing middle class consumes more meat."
Congress is two years away from drafting the new farm bill but Roger Johnson already can name the leading question for farm policy. "The big issue in the next farm bill will be, is the safety net really working for farmers?" Johnson, the president of the National Farmers Union, told Ag Insider. "We have a lot of folks who are beginning to struggle financially."