Another growing season is rapidly coming to a close. As of this writing in early November, 85% of soybean harvest is complete and 71% of the corn nationally. Locally, over 90% of the soybeans were harvested by the second week of October, which is well ahead of normal, and a good start was made on corn as well. Approximately 85% of the local corn has been harvested at this time, which is ahead of average.
Yields this year can be summed up as variable, but in many cases better than expected. We knew going into harvest the haves and have-nots on summer rainfall and generally drier areas were down on both corn and soybean yields. The areas that received good early August rains have done better than we would have guessed given the dry and sometimes hot end to the growing season.
Why the good results? We think improving seed genetics, attention to detail in fertility and use of crop protection products all play a part in keeping a healthy plant that was able to withstand some less than ideal conditions this year. It still takes rain to make good crops, but our bottom end seems to work higher over time.
Nationwide, the latest USDA crop estimates are for 173 bu/acre on corn and 49.6 bu/acre on soybeans. Those are virtually identical yields to last year, and below trend line on both crops. Grain prices, however, are $2.00/bu lower on corn and $.80/bu lower on soybeans compared to last year at this time.
Why the lower prices, especially on corn? Supply and demand. Corn acres were up substantially this year to one of the highest levels of the ethanol era. On top of this, export demand has faltered, particularly to China. Brazil raised a huge crop of both corn and soybeans this year and has become an increasingly strong export competitor. They have comfortably exceeded U.S. soybean exports for a number of years and now projections are for them to push ahead of us in corn exports as well, although perhaps not on a consistent basis. The bulk of Brazilian corn production is from their Safrinha, or second crop, after soybeans. The acres of the crop planted each year is highly dependent on weather and economics and will vary. At this time it looks like acres will be lower, which should provide some support for our corn price. Carryover of this year’s corn crop will still likely be over 2 billion bushels at the end of the marketing year, and historically ending stocks this large will put a cap on prices. Any rallies will be selling opportunities in corn.
Soybean economics look brighter in comparison. Carryover will be tight at around 200 million bushels, which is near minimum or pipeline supplies without demand rationing. Any perceived problem with the South American crop being planted now should quickly be bid into improved prices. While we struggle on the export side, domestic use is growing. Last month, for the first time, use of bean oil for fuel was larger than the traditional Food, Feed and Industrial category. More processing is coming on line for this product. With the focus on sustainable energy we should be able to replace some whole bean export demand with higher valued soybean meal as an offshoot of the crushing of soybeans for oil.
An Early Peek at 2024
How does next year look from this admittedly long range? A couple of positives stand out. First, input costs. After shooting to record levels last fall and winter, fertilizer prices for fall 2023 application dropped significantly this summer. We have been able to lock in prices for the same analysis of fertilizer for between half and 2/3 of last year’s cost. Fertilizer is still a world product, subject to the whims of energy prices and geopolitics, so no promises going forward, but most producers are taking advantage by getting lower priced product on this fall. Another positive, at least for many in our area, is weather. After being in drought continually for four years, we have had some good rains to recharge soil moisture this fall. Time will tell if this pattern continues, and we have plenty of room in the soil for more recharge, but at least we should be in a better place as we enter 2024.
