You don’t have to go far in the Midwest to find a corn or soybean field. And it’s not hard to tell how the weather has been just by looking at those fields. Some years at this time, there are puddles in the field and spots where it is just too wet for plants to grow. Other years, like this one, everything is dry with dust blowing through the fields.
Despite those dry, dusty fields, corn and soybean yields are predicted to be up from last year, according to the U.S. Department of Agriculture (USDA). Corn production is estimated at a record 178.4 bushels per acre, with the USDA predicting the entire crop to come in at 14.586 billion bushels. Soybean yields are also predicted to be above last year’s crop, with yields of 51.6 bushels per acre and a total crop of 4.586 billion bushels per acre.
Though the numbers remain strong, the ag industry is concerned about more than just the numbers.
Quality over quantity
While dry Midwestern weather hasn’t dropped yields, crop quality has taken a hit in states experiencing long dry spells, according to the report. Seventy percent of corn 66 percent of soybean crops are reported in good or excellent condition. With soybean and corn harvest on the horizon, the dry weather continues to be a concern for growers as those quality percentages have fallen recently.
The large soybean crop will add to the existing stockpile, which is expected to grow to 785 million bushels by the end of the 2018/19 season. The stockpile and trade worries are driving prices down. Soybean futures fell 5 percent in early August on concerns about the large crop and the existing trade war with China. Soybeans make up about 60 percent of U.S. agricultural exports to China, according to Bloomberg.
The 2018/19 season is providing plenty of challenges for soybean farmers, which may limit profitability.
Per-bushel soybean prices are expected to be $8.90, down 35 cents from the July prediction. Those prices would be the lowest since 2006/07, which will make it difficult for some soybean farmers to turn a profit, Stiles predicted.
Corn prices for the 2018/19 year are expected to be $3.60 a bushel, down from earlier predictions of $3.80 a bushel. Those prices, however, are a 20-cent increase over 2017/18 levels, according to the USDA report. Corn futures were also down in early August, falling more than 2 percent, with traders worried about the larger crop. Although prices fell, demand for corn remains strong, keeping supplies in check, according to the St. Louis Post-Dispatch. The stockpile of corn is expected to fall from 2.027 billion bushels at the end of the 2017/18 season to 1.684 billion bushels by the end of 2018/19.
The falling futures for both soybeans and corn reflect traders figuring out how to deal with the larger crop. “The trade’s going to have to calculate in much larger crops in the U.S. that, for now, more than outweigh production problems outside the U.S.,” Terry Reilly, senior commodities analyst for Futures International told Successful Farming.
Drought conditions have been a cause for concern for crop and livestock producers in the Midwest. Increased yield expectations for corn and soybeans, coupled with trade uncertainty, will keep feed grain prices low, according to analysts. The larger crop and drop in price are expected to increase feed use, though with shifting weather conditions, yields could still be altered.
The feed industry has been hit with significant challenges throughout the past decade, and tariffs set by the new administration threw a curveball for our industry earlier this year. While the U.S. and China talk through trade resolutions, the USDA announced it would provide up to $12 billion in aid to the ag industry to weather the trade war.
As the futures markets sort out the impact of the larger crop prediction, one thing is for sure, there will be no shortage of corn or soybeans in 2018/19.
Gretchen Henry is the co-founder and CEO at Sprout Solutions, a full-service software platform that provides mills and merchandisers in the agricultural industry with accurate, Web-based tools and systems. Connect with Sprout Solutions on Facebook and Twitter .