A very dry growing season in the western Corn Belt has reduced yields, and it looks like better conditions and yields in the east were not enough to counter the losses.
The latest USDA crop estimates, released on November 9th, pegs corn yields at 172.3 bushels per acre and soybeans at 50.2 bushels per acre. These are 4.4 and 1.5 bushels per acre respectively lower than last year. On the demand side, several headwinds have combined to reduce projected usage, with corn about 6% lower and soybeans 3% lower. These headwinds include a strong dollar reducing exports, concern on a slowing global economy and smaller livestock numbers reducing feed demand.
Still, if final yield numbers come in close to the November estimates, carryover of grain at the end of the 2022/23 marketing year on August 31st are projected at tight levels.
Corn stocks will be at 1.17 billion, down from 1.38 billion and the tightest stocks to use ratio since the drought of 2012. Soybean stocks are projected slightly lower as well, and also at historically tight levels. Market year price estimates are $6.80 per bushel for corn and $14.00 per bushel for soybeans, both near current local bids.
The grain trade’s attention now turns to the South America crops. Strong grain prices incentivize producers there to increase production, so acres will likely be higher.
Weather is the other leg of the production story. Early conditions are good in a large part of Brazil, but southern Brazil and Argentina are seeing very dry conditions. These areas tend to suffer during La Nina years and with a strong La Nina still in place and uncertainty on when it will begin to dissipate, this will be an important area to watch.
