Huge US corn, soy yields could stave off further increases -Braun
The opinions expressed here are those of the author, a market analyst for Reuters
By Karen Braun
NAPERVILLE, Illinois, Sept 12 (Reuters) -The grain market moved one step closer to settling the size of the U.S. corn and soybean crops on Thursday with fresh projections from the U.S. Department of Agriculture.
But the question now is whether the final harvest volumes could be bigger or smaller in a way that could materially change the current fundamental landscape, where supplies are very ample.
USDA on Thursday pegged 2024-25 U.S. corn production at 15.186 billion bushels, the second largest crop on record and up slightly from August. Yield rose to 183.6 bushels per acre (bpa) versus 183.1 forecast in August, against trade expectations that yield would decline.
Despite corn yield and production landing above the range of analyst estimates, traders were not overly disappointed with the numbers as CBOT December corn futures CZ24 ended Thursday’s session fractionally higher.
U.S. soybean production was as expected on Thursday with a yield of 53.2 bpa, matching both the analyst predictions and USDA’s August forecast. That maintained the record crop target, though traders may have been bracing for even bigger numbers as November soybeans SX24 jumped 1% during the session.
But are the bigger numbers yet to come? Final corn and soy harvested areas tend to be lower than those predicted at this time of year, but the yield direction is not as straightforward.
YIELD TRENDS
Final U.S. corn yield has been higher than USDA’s September projection in 12 of the last 20 years. But only five of those 12 years featured stronger corn yields in September than what USDA had slated in July.
In other words, it is more likely for final yield to be larger than in September when the September number is already somewhat light, and that is definitely not the situation this year.
USDA’s 183.6-bpa corn peg is above the July trendline yield of 181 bpa, and this month’s estimate is some 3.6% above last year’s record yield. The last times USDA’s September estimate towered similarly above the prior highs were in 2004 and 2014.
All those same ideas hold for soybeans. Final soy yield was higher than in September in 13 of the last 20 years, but only four of those 13 times occurred when the September yield was higher than in July.
The 53.2-bpa soybean yield is above the July trendline of 52 bpa and 2.5% above the prior record set in 2016. Within the last two decades, only 2014 and 2016 featured September soy yield forecasts that represented even bigger records.
BALANCE SHEET DAMAGE?
If recent trends lend to the whittling of corn and soybean yields, and thus production, what could the implications be for overall supply?
In recent years when final corn and soybean yields were lower than in September, the average reduction was about 2% for both crops.
If final corn yield was 2% lower than in September, that would still result in a record 179.9 bpa but take about 300 million bushels off production.
That would keep 2024-25 ending stocks about a third larger than observed between 2020-21 and 2022-23, and that is before making any reductions to demand, which would be necessary if the crop was smaller.
If soybean yield ends up decreasing by 2%, production falls by 92 million bushels. Before demand adjustments, ending stocks would be around 75% heavier than the tighter levels observed between 2020-21 and 2022-23.
While it is certainly not impossible for USDA to throw the market corn and soy yield curve balls in the months ahead, they would have to be extraordinary deviations to significantly alter the current market climate given how large carryout estimates already are for 2024-25.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- U.S. corn yield: September to Final https://tmsnrt.rs/4d6B96i
Graphic- U.S. soybean yield: September to Final https://tmsnrt.rs/4e3hLZ6
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
