September 14, 2022
USDA cuts outlook for corn and soy due to harvest setbacks
The US Department of Agriculture (USDA) said corn and soybean supplies in the country will drop to multi-year lows because of August hot and dry weather in western growing areas have slashed the harvest potential for both crops, Reuters reported.
The USDA reduced its forecast for U.S. corn end stocks in 2022–2023 to 1.219 billion bushels, a 10-year low, from 1.388 billion. At 200 million bushels, soybean supplies were at their lowest level in seven years.
The entire world was relying on the US massive production this fall to help make up for the decreased grain exports from the conflict-torn Ukraine. Although recent grain shipments from the Black Sea region have entered the market on a global scale in recent weeks, the futures market has experienced volatility in the last week due to ongoing geopolitical unrest and supply chain uncertainty.
Following the release of the report, soybean futures on the Chicago Board of Trade surged, with the most active contract rising 4.2% and approaching its largest daily gain in 2-1/2 months. Futures for corn increased to their highest level since June 28.
Ted Seifried, vice president of Zaner Group, said the bean yield came in well below the low-end of expectation, which, along with USDA's reduction in harvested soybean acres, is what is giving soy futures their strength today.
Based on an average yield of 172.5 bushels per acre, farmers will likely harvest a corn crop of 13.944 billion bushels, according to the USDA's monthly World Agricultural Supply and Demand Estimates report. That would if realised be the smallest U.S. harvest in the past three years.
An estimated 4.378 billion bushels of soybeans were harvested, with an average yield of 50.5 bushels per acre.
According to the average of estimates in a Reuters poll of analysts, the estimated corn production was 14.088 billion bushels, based on a yield of 172.5. For soybean production and yield, the average trade predictions were 4.496 billion bushels and 51.5, respectively.