Corn, soybean prices take hit with latest USDA estimates
Soybeans expected to ‘shrug this off a lot faster than corn’
The Illinois corn harvest was projected to drop this year, but not as much as markets expected, prompting prices to fall. (Flickr/Ron Frazier)
By Ted Cox
The U.S. Department of Agriculture lowered harvest estimates for corn and soybeans Thursday, but not as much as markets expected, causing prices to fall.
“We dropped hard,” said Karl Setzer, AgriVisor commodity risk analyst, in an interview with the RFD Radio Network. According to a FarmWeekNow.com story, July corn prices declined 12.25 cents while September corn slipped 4.75 cents.
“There’s a very definitive line between what the trade considers old crop and new crop,” Setzer added.
FarmWeekNow reported that it “probably felt like a little salt to the wound for farmers” already feeling the effects of President Trump’s protracted trade war with China.
The USDA released its latest Crop Production report Thursday. It projected that the Illinois corn harvest would drop from 10.85 million acres last year to 10.25 million acres this year. The yield also was projected to fall from a record 210 bushels an acre last year to 179 this year, down a tick from the 180 bushels an acre projected a month ago.
Overall, Illinois corn production was expected to drop from 2.3 billion bushels to 1.8 billion. Nationally, the corn crop was expected to drop from 14.4 billion bushels to 13.8 billion — the third straight annual reduction since the record set in 2016.
It wasn’t enough for markets, which expected even lower estimates that would have cut supply and sustained prices. FarmWeekNow reported: “The corn production estimate was about 95 million bushels above the average trade guess prior to the report.”
“Everybody was looking for a friendly corn number after the stocks report Sept. 30. But USDA actually increased yield a freckle,” said Ami Heesch, market analyst with CHS Hedging, in a teleconference reported by FarmWeekNow.
“The report wasn’t that negative,” she added. “It’s just not as friendly as the market was looking for, so it brought the market down.”
The size of the Illinois soybean harvest was projected to drop from last year’s 10.5 million acres to 9.9 million acres, while the yield was also expected to fall from a record 63.5 bushels an acre to 51, down from the estimated 53 bushels an acre a month ago. Overall production was trimmed from 667 million bushels to 507 million. Nationally, soybean production was expected to fall from 4.4 billion bushels to 3.6 billion, the smallest harvest since 2013.
The worse news for soybeans was better for prices. The USDA upped its season-average prices by 50 cents a bushel for soybeans, to $9, and by 20 cents for corn, to $3.80 a bushel.
“On the bright side, the average corn price increased 20 cents,” Setzer said. “But, I think soybeans held together better. There’s good demand. I expect soybeans to shrug this off a lot faster than corn.”
On the positive side, the Illinois Farm Bureau joined agriculture groups across the nation Friday in cheering a new trade deal with Japan signed this week. According to the IFB: “The agreement immediately eliminates all tariffs on U.S. exports of sweet corn, almonds, broccoli, and prunes, among other things. Other tariffs on products such as ethanol, cheese and whey, fresh cherries, and other farm and ranch products will be phased out over a number of years.
“The U.S. will also benefit from increased export quotas on products such as corn starch, malt, potato starch, fructose, and more,” it added.
“U.S. farmers remain strong in their ability to feed the world when they have improved access to some of the world’s largest markets,” said IFB President Richard Guebert Jr. “We greatly hope that the momentum from this win will carry through to the negotiating table that Chinese leaders and the Trump administration will converse at this week. Our thanks go out to the administration for their continued efforts on the trade front.”
President Trump’s trade war with China has hurt farmers for more than a year now. Chinese trade negotiators were reported to be in the nation’s capital at the end of this week. Trump said at the signing ceremony for the Japanese trade deal that “we think there is a chance that we could do something very substantial” with China.