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October 17, 2022

USDA DECREASES CORN ENDING STOCKS

The monthly USDA World Supply and Demand Estimates (WASDE) Report that was released on October 12 will likely impact corn and soybean markets in the coming months. The WASDE Report decreased the expected U.S. corn ending stocks by the end of the 2022-23 marketing year, as compared to the September estimate. The projected soybean ending stocks for 2022-23 in the latest WASDE report remained the same as a month earlier.

The latest WASDE report showed a decrease in total demand levels for corn in the coming year, as compared to 2021-22 levels. Total demand for corn usage in 2022-23 was estimated at 14.15 billion bushels, which down by 125 million bushels from the September estimate and compares to total corn usage of nearly 15 billion bushels in 2021-22. The reduced corn usage estimates are mainly due to a projected decrease in corn export levels and corn used for livestock feed in the coming year. The total 2022-23 soybean usage is estimated at 4.4 billion bushels, which is down slightly as compared to a year earlier, mainly due to a slight decrease in expected export levels.

The October WASDE Report decreased the estimated U.S. corn ending stocks for the 2022-23 marketing year, as compared to the September report. The 2022-23 corn ending stocks are now estimated at 1.17 billion bushels which compares to previous year-end corn carryout levels of 1.38 billion bushels in 2021-22, 1.23 billion bushels in 2020-21, 1.99 billion bushels in 2019-20, and 2.22 billion bushels in 2018-19. The 2022-23 U.S. corn ending stocks-to-use ratio is now estimated at only 8.1 percent, which is very tight and compares to ratios of 9.2 percent in 2021-22, 8.3 percent for 2020-21, 14.4 percent in 2019-20, and 15.5 percent for 2018-19. The continued tight stocks-to-use ratio should help support the narrow basis levels at many locations in the Midwest and keep the potential for short-term rallies in the cash corn market in the coming months.

The 2022-23 U.S. soybean ending stocks in the WASDE Report were estimated at 200 million bushels, which is the same as the September USDA report. The projected 2022-23 carryover level is lower than the estimated final ending stocks of 274 million bushels in 2021-22 and 257 million bushels in 2020-21. The 2022-23 soybean ending stocks would still be considerably below some other recent carryover levels of 523 million bushels in 2019-20, 909 million bushels in 2018-19, and 438 million bushels for 2017-18. The U.S. soybean ending stocks-to-use ratio for 2022-23 is estimated at only 4.4 percent which is a very tight level. This compares to 6.1 percent for 2021-22 and 5.7 percent for 2020-21; however, the 2022-23 ratio would be well below the ratios 13.2 percent ratio for 2019-20 and nearly 23 percent for 2018-19. The expected tight degree of projected soybean ending stocks for 2022-23 will likely help support short-term soybean prices in the coming months; however, continued market strength may depend on 2023 South American soybean production and continued solid export markets.

USDA is estimating the U.S farm-level cash corn price for 2022-2023 at an average of $6.80 per bushel, which was up $.05 per bushel from the September estimate. The 2022-23 USDA price estimate is the expected average farm-level price for the 2022 crop from September 1, 2022 through August 31, 2023; however, this does not represent estimated prices for either the 2022 or 2023 calendar year. The projected 2022-23 average corn price compares to final market-year average corn prices of $6.00 for 2021-22, $4.53 per bushel for 2020-21, $3.56 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel for both 2017-18 and 2016-17.

USDA is projecting the U.S. average farm-level soybean price for the 2022-2023 marketing year at $14.00 per bushel, which was a decrease of $.35 per bushel from the September estimate. The 2022-23 soybean price estimate would still be the highest in several years and compares to final market-year average prices of $13.30 per bushel for 2021-22, $10.80 per bushel for 2020-21, $8.57 per bushel for 2019-20, $8.48 per bushel in 2018-19, and $9.35 per bushel in 2017-18.

USDA Lowers 2022 Corn and Soybean Yield Estimates

The monthly USDA Crop Production Report was also released on October 12. USDA reduced the expected 2022 national average corn yield by six-tenths of a bushel and decreased the projected 2022 U.S. average soybean yield by seven-tenths of a bushel per acre as compared to the September report. The latest estimated 2022 national corn yield is 5.1 bushels per acre lower than the final 2021 average yield, while the projected U.S. average soybean yield for 2022 is 1.6 bushels per acre below the final 2021 national soybean yield.

USDA is estimating the 2022 national average corn yield at 171.9 bushels per acre, which is well below the record U.S. average corn yield of 176.7 bushels per acre that was set in 2021. The projected 2022 U.S. corn yield also compares to 171.4 bushels per acre in 2020, 168 bushels per acre in 2019, and 176.4 bushels per acre in 2018. The estimated 2021 U.S. harvested corn acreage is 80.8 million acres, which is well below the 85.3 million acres that were harvested last year. The latest USDA Report estimated the total U.S. corn production for 2022 at just under 13.9 billion bushels, which is about 7 percent below the production level of 15.1 billion bushels in 2021. The anticipated 2022 corn production compares to levels of 14.1 billion bushels in 2020, 13.6 billion bushels in 2019, 14.4 billion bushels in 2018, and the record U.S. production of 15.15 billion bushels in 2016.

USDA is estimating 2022 U.S. soybean yield at 49.8 bushels per acre, which compares to 51.7 bushels per acre in 2021, 51 bushels per acre in 2020, 47.4 bushels per acre in 2019, 50.6 bushels per acre in 2018, and the record U.S. soybean yield of 52.0 bushels per acre in 2016. The harvested soybean acreage for 2022 is estimated at 86.6 million acres, which is up from 86.3 million acres in 2021 is well above 82.6 million acres in 2020; however, it is still below the 87.6 million harvested acres in 2018. The USDA Report estimated 2022 U.S. soybean production at 4.31 billion bushels, which trails the production level of 4.46 billion bushels in 2021 but is above the production levels of 4.22 billion bushels in 2020 and 3.55 billion bushels in 2019.

The October USDA Report increased the expected 2022 corn yield in some States and lowered yield expectations in other States, compared to the September Report. Minnesota is projected to have a 2022 corn yield of 190 bushels, which compares to 177 bushels per acre in 2021, 191 bushels per acre in 2020, 173 bushels per acre in 2019 and the current State record yield of 194 bushels per acre in 2017. USDA is estimating the 2022 Iowa corn yield at 200 bushels per acre, which compares to the state record yield of 204 bushels per acre in 2021, 177 bushels per acre in 2020, and 198 bushels per acre in 2019. Illinois is expected to have record average corn yield at 210 bushels per acre in 2022, which compares to 2021 average corn yields of 202 bushels per acre. Other projected 2022 average corn yields are Indiana at 187 bushels per acre, compared to 195 bushels per acre in 2021, North Dakota at 141 bushels per acre, compared to 105 bushels per acre in 2021, and Wisconsin at 182 bushels per acre, compared to 180 bushels per acre in 2021. The drought-stricken States of Nebraska and South Dakota are projected to have average 2022 yields of 172 and 130 bushels per acre respectively, which compare to 2021 corn yields of 194 bushels per acre in Nebraska and 134 bushels pe acre in South Dakota.

USDA is estimating the 2022 Minnesota soybean yield at 50 bushels per acre, which compares to 47 bushels per acre in 2021, 50 bushels per acre in 2020, 44 bushels per acre in 2019 and the record yield of 52.5 bushels per acre in 2016. Iowa is projected to have a 2022 soybean yield of 58 bushels per acre, compared to the record yield of 63 bushels per acre in 2021, 56 bushels per acre in 2020, and 55 bushels per acre in 2019. Other projected 2022 State soybean yields are Illinois at 64 bushels per acre, compared to a record yield of 65 bushels per acre in 2021, Indiana at 59 bushels per acre, compared to 60 bushels per acre in 2021, North Dakota at 35 bushels per acre, compared to 25.5 bushels per acre in 2021, Wisconsin at 54 bushels per acre, compared to 55 bushels per acre in 2021, and South Dakota at 40 bushels per acre, which is the same as the 2021 average yield. Nebraska, which has been hard-hit by drought, is projected at 49 bushels per acre, compared to 63 bushels per acre in 2021.

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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 — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/