Increased Corn Yields Offset Acreage Declines

The latest U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimate, or WASDE, report, released August 12, predicted a much higher U.S. corn harvest than anticipated, sending the price of corn downward.

The WASDE forecast corn production at 13.9 billion bushels, up by 26 million bushels from the July projection. The report said a decline in harvested acres was partly offset by an increase in yield from July projections. The season’s first survey-based corn yield forecast, at 169.5 bushels per acre, is 3.5 bushels higher than last month’s projection.

The crop production report said that Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio and South Dakota are all forecast to have yields below those of a year ago. Only Missouri was forecast to have yields above a year ago. Some experts said forecasted amounts could go down by October given the fluid nature of the weather, exports and demand for ethanol.

Corn used for ethanol was reduced by 25 million bushels to 55 billion. On August 12, farm organizations reacted to news that the EPA had recently issued 31 ethanol waivers to small refineries, reducing domestic demand for ethanol. The National Corn Growers Association, citing a sustained drop in farm income, said, “It’s time for this administration to act in the best interest of farmers.” Trade group Growth Energy said “[President Donald] Trump must move quickly if there is any hope of repairing the damage” to the ethanol industry and rural America.

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The WASDE forecast U.S. oilseed production for 2019/20 at 111.5 million tons, down 4.5 million from July projections due to a lower soybean production forecast. Soybean production was forecast at 3.678 billion bushels, down 165 million because of lower harvested acreage.

Major global coarse grain trade changes for 2019/20 include corn export increases for Ukraine and Serbia, with a partially-offsetting reduction for Russia. For 2018/19, estimates of exports for Argentina and Brazil were raised for the local marketing years beginning March 2019, based on larger than expected shipments during July.

Foreign corn ending stocks were higher relative to July, mostly reflecting increase for china, the EU, Ukraine and Turkey, partially offset by reductions for Argentina and Indonesia.