Surveyors who visited farm fields this month have kicked dirt off their shoes and reached a striking conclusion: the US is on the cusp of record corn and soyabean harvests.
The government’s first crop production report of the year for the two commodities, released on Friday, suggested no end to a glut that has depressed grain prices, socked farmers’ incomes and weighed on land values.
The US is the world’s biggest producer of corn and soyabeans. This autumn its farmers are set to harvest 15.2bn bushels of corn, up 11 per cent from last year, and 4.06bn bushels of soyabeans, 3 per cent more than last year, the US Department of Agriculture said. Both figures topped analysts’ estimates.
While grain farmers have been suffering from low prices, they nevertheless planted tens of millions of acres in the spring in an effort to keep cash flowing.
After poor weather damaged rival South American harvests earlier this year, momentarily jolting prices, summer in the US Corn Belt has been characterised by “excellent field conditions”, the USDA said. The crops have now matured to the point where adverse heat or dryness poses less of a threat.
“It’ll keep a lid on prices, and certainly, market participants need to be cognisant that we could have further increases in yields for both corn and soyabeans,” said Bill Lapp, president of Advanced Economic Solutions, a consultancy in Omaha.
CBOT December corn dropped 2.2 per cent to $3.24½ a bushel, while CBOT November soyabeans fell 1.3 per cent to $9.71 a bushel. CBOT December wheat declined 1.7 per cent to $4.29½ a bushel after the USDA estimated domestic wheat production at 2.32bn bushels, 13 per cent more than last year.
Prices fell even as the agency also raised its forecast for grain demand. US corn use would in the coming crop year rise by 6 per cent to 14.5bn bushels as more kernels find their way into animal feed, ethanol fuel and ships bound for export, the USDA said. Demand for soyabeans, used mainly for animal feed and vegetable oil, would rise by 3.3 per cent to 4bn bushels.
The big impending US crops add to a well-supplied global picture. Russia was poised to become the world’s largest wheat exporter for the first time as “excellent growing conditions throughout the country” boost its harvest to 72m tonnes, the USDA said. Global stocks of wheat will be at a record 253m tonnes.
The August US monthly crop production report is based on surveys of farmers. In late July and early August government workers visited farms to count and measure plants on sample plots. They also interviewed about 22,000 farmers about the health of their crops.
Get alerts on Agricultural commodities when a new story is published