FOCUS ON AG
October 4, 2021
HARVEST SEASON PROGRESSING QUICKLY IN MANY AREAS
The warm late growing season during September this year has pushed the 2021 corn and soybean crop very rapidly toward maturity. By the end of September, soybean harvest was over 50 percent completed in many portions of Upper Midwest, while some areas still needed a bit more time for soybeans to fully mature. Many corn hybrids had also reached physiological maturity by mid-September and were also ready to be harvested by the end of the month.
As of September 29, a total of 2,757 growing degree units (GDU’s) had been accumulated since May 1 at the University of Minnesota Southern Research and Outreach Center at Waseca, which is similar to many areas of Southern Minnesota and Northern Iowa. This exceeds the normal GDU accumulation at Waseca by 11 percent for that date. GDU accumulation in the last half of September was nearly double the normal GDU accumulation for that time period. The extra growing degree units, combined with the dry weather, has helped this year’s corn and soybean crop reach maturity much quicker than normal, as well as to dry down rapidly in the field.
Most soybeans have now reached maturity and soybean harvest has been underway for the past couple of weeks in many locations across Southern Minnesota and Northern Iowa. Widespread rainfall across the region this past weekend did slow harvest in some areas; however, well over 50 percent of the soybeans have been harvested in many locations. As expected, soybean yields have been highly variable across the Upper Midwest due to differing impacts from drought conditions in 2021. Generally, the soybean yields have been average or above and much more consistent in South Central and Southeast Minnesota and the eastern half of Iowa. Soybean yields in other areas have been highly variable, with some yields well below the crop insurance APH (average) yields.
Most of the corn in the Upper Midwest has reached physiological maturity, which is the “black layer” stage, or is very close to reaching maturity. Corn is usually at 30-32 percent moisture when it reaches the “back layer” stage, and then begins to dry down naturally in the field. Ideally, growers like to see corn dried down in the field to at least 20-22 percent moisture, or lower, before they harvest the corn. This greatly saves on corn drying costs and improves the quality of the corn being harvested and going into storage. Corn is usually dried down to a final moisture content of 15-16 percent moisture for safe storage until the following Summer.
Corn will dry down about 0.50 % per day naturally at an average daily temperature of 60 degrees F, which increases considerably at higher temperature levels, such as have existed in recent weeks. At Waseca, the normal daily average air temperature in September is above 60 degrees, but that drops to only about 48 degrees during October. If favorable drying weather continues in the coming weeks, it is likely that corn drying costs in many areas will be greatly reduced in 2021. The moisture content on much of the corn being harvested in many areas has dropped considerably during the last half of September and is now near 20 percent or lower.
It is a bit early to project 2021 corn yields across the Midwest; however, early indications are that corn yields in many areas will be even more variable than the soybean yields. In portions of the upper Midwest that had timely and adequate rainfall during the growing season, 2021 corn yields may end up average or above average. However, in North and South Dakota and Western Minnesota, as well as portions of Western Iowa and dryland corn in Nebraska, corn yields will be well below APH yields due the drought conditions this past Summer. Based on the September 10 USDA Crop Report, Minnesota’s 2021 average corn yield was estimated at 174 bushels per acre, which is well below the record statewide average corn yield of 194 bushels per acre in 2017. Iowa’s 2021 average corn yield is projected at 198 bushels per acre, which is slightly below the 2016 record yield of 203 bushels per acre. Other 2021 statewide corn yield estimates include North Dakota at 108 bushels per acre, South Dakota at 133 bushels per acre, Nebraska at 188 bushels per acre, and Illinois at 214 bushels per acre.
USDA GRAIN STOCKS REPORT INCREASES SOYBEAN SUPPLY
The September 30 USDA Grain Stocks Report surprised most grain marketing analysts and was especially “bearish” for soybean markets and somewhat negative for future corn markets. Grain stock estimates for both soybeans and corn were higher than pre-report estimates, while wheat stocks came in lower than anticipated. Following the USDA Report, November soybean futures on the Chicago Board of Trade (CBOT) declined by over 30 cents per bushel. Corn futures also declined slightly, while wheat futures were sharply higher.
The biggest surprise in the Grain Stocks Report was the USDA soybean stocks estimate of 256 million bushels. The soybean stocks estimate was 47 percent above the average grain trade estimate of 174 million bushels and even exceeded the highest estimates of marketing analysts by over 50 million bushels. The soybean stocks estimate on 9-30-21 is still over 50 percent lower than the U.S. soybean inventory of 525 million bushels a year ago on September 30, 2020. It was estimated that only 68 million bushels of soybeans were stored on farms as of 9-30-21, which represented approximately 27 percent of the total stocks.
The biggest reason for the higher soybean stocks in the latest USDA report was a larger than expected decline in the total soybean usage for processing, exports, etc., from June 1 to August 31. The total 2021 soybean usage during that period was estimated at 513 million bushels, which at the lowest level since 2015 and compares to soybean usage of 858 million bushels in 2020. The other factor that impacted the September 30 soybean stocks figure was USDA including an addition of 81 million bushels to the final U.S. soybean production for 2020, based additional harvested acres and a slightly higher final U.S. average soybean yield last year. The CBOT November soybean futures price closed at $12.56 per bushel on 9-30-21, compared to $10.23 per bushel a year ago.
The USDA Report on September 30 estimated total U.S. corn stocks at 1.236 billion bushels, which down approximately 36 percent from the 1.92 billion bushels on 9-30-20 and is at the lowest level in the past seven years. The USDA corn stocks estimate on 9-30-21 was 81 million bushels higher than the average grain marketing industry projections and was near the highest estimates by the marketing analysts. USDA estimated that 395 million bushels of corn was stored on farms as of 9-30-21, which is down 47 percent from a year ago, and represents only 32 percent of the total corn stocks. This probably helps to explain the very tight corn basis levels that currently exists at local grain elevators and processing plants in many areas of the Upper Midwest.
The latest report implies total corn usage for feed, ethanol, exports, etc., from July 1 to September 30 this year at 2.87 billion bushels, which is down slightly from a year ago and is at the lowest level since 2015. The decline in corn usage was offset by a downward adjustment of 71 million bushels by USDA in the final 2020 U.S. corn production totals, based on reductions in the 2020 harvested acres and the final 2020 U.S. average corn yield. The CBOT December corn futures price on 9-30-21 was $5.37 per bushel, compared to September 30 CBOT corn prices of $3.79 in 2020, $3.88 in 2019, $3.56 in 2018, $3.55 in 2017, and $3.29 in 2016.
The USDA Grain Stocks Report listed total U.S. wheat stocks at 1.78 billion bushels on 9-30-21, which down nearly 18 percent from the 2.16 billion bushels a year ago on September 30. The implied usage of U.S. wheat from June 1 to August 31 this year was 711 million bushels, which was up slightly from a year ago and was the highest usage level for that period since 2016. The closing wheat futures on the CBOT rose by over $.20 per bushel following the USDA report on 9-30-21. Both CBOT wheat futures prices and local wheat prices are at their highest levels in several years due to the tighter wheat supplies and increased demand. The strong wheat prices are likely to continue into 2022, given the greatly reduced 2021 spring wheat production in the primary growing areas of North and South Dakota and Northwest Minnesota, due to prolonged drought conditions.
Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960) E-mail — firstname.lastname@example.org) Web Site — http://www.minnstarbank.com/