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USDA: Large crop estimates to pressure prices in USA

  • 30 May, 2023
  • United States

USDA projects some record-large crops in the U.S. and South America this year and into 2024.

If realized, ending stocks are expected to rise while crop prices could plummet in the coming year based on the Ag Department’s May world ag supply and demand estimates.

USDA projects this year’s corn crop, which U.S. farmers are still planting, could produce a record 15.3 billion bushels (up 10% from last year) with an average yield of 181.5 bushels per acre (up 8.2 bushels from last year).

Meanwhile, U.S. soybean production was pegged at 4.51 billion bushels this season, up 5% from last year.

The hefty crop production estimates pushed 2023-24 ending stocks estimates to 2.2 billion bushels for corn (up 805 million bushels from 2022-23) and 335 million bushels of beans, up 120 million bushels from the revised 2022-23 forecast. Ending stocks of wheat, though, could slip 11% to the lowest level in 16 years.

“We got the first look at the 2023-24 balance sheets and they were bearish for corn and soybeans,” Joe Camp, market analyst with CommStock Investments, told the RFD Radio Network. “Ending stocks were up a bit more than anticipated.”

USDA’s season-average price estimates reflected the bearishness of the big crops with 2023-24 projections at $4.80 per bushel for corn (down $1.80 from 2022/23), $12.10 for beans (down $2.10) and $8 for wheat, down 85 cents from last year’s record.

This season’s crop production estimates, of course, are based on weather-adjusted trends assuming normal planting progress and summer weather.

“We know we’re going to go back to trading weather here pretty quickly,” Camp said as most crop markets were in the red following the May 12 release of the latest estimates. “That will be the big determinant of what the next crop looks like.”

Elsewhere, USDA pegged 2022-23 production in Brazil at a record 130 million metric tons (mmt) of corn, up 5 mmt from last month, and 155 mmt of beans, up 1 mmt.

Soy production in Brazil for 2023-24 could soar to a record 163 mmt, according to USDA. Planting for that crop will begin in October.

“We didn’t see any major changes on the global balance sheet,” Camp said. “They’re still sticking with big numbers in Brazil and a damaged crop out of Argentina.”

As for demand, USDA projects total corn use could increase 5% in 2023-24, with food, seed and industrial use up 55 million bushels, exports projected to rise by 325 million bushels to 2.1 billion and corn used for ethanol to edge 1% higher.

Meanwhile, demand for soybean oil as a biofuel feedstock was projected to accelerate by 900 million pounds to 12.5 billion pounds in 2023/24. But, U.S. soy exports could slip by 40 million bushels to 1.98 billion in the next year due in large part to competition from South America.

This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association.

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