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August 14, 2019

Reaction to the U.S. August Crop Report

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Corn - In the August Crop Report the USDA estimated the 2019 U.S. corn planted acreage at 90.0 million acres with the corn harvested acreage at 82.0 million acres (91.1% of the planted). The corn yield was estimated at 169.5 bu/ac resulting in a production of 13.9 billion bushels. If realized, this would be the 5th highest corn yield on record with record yields forecasted for Kentucky and Tennessee. The corn yield is down 6.9 bu/ac from 2018, but up 3.5 bu/ac from their July estimate.

Soybeans - The August Crop Report estimated the 2019 U.S. soybean planted acreage at 76.7 million acres with the soybean harvested acreage at 75.9 million acres (98.9% of the planted). The soybean yield was estimated at 48.5 bu/ac resulting in a production of 3.68 billion bushels. If realized, this would be the 4th highest soybean yield on record with record yields forecasted for Arkansas, Kentucky, and Tennessee. The soybean yield is down 3.1 bu/ac from 2018 and unchanged from their July estimate.

I found these estimates hard to reconcile and here are my thoughts:

Corn

  • The corn planted acreage seems high given that there were 11.2 million acres of prevent plant. So if U.S. farmers planted 90 million acres and there were 11.2 million of prevent plant acres, did farmers really intend to plant 101.2 million acres of corn (90.0 +11.2)?? Additionally, the prevent plant acreage will only go higher as more information becomes available. I have a hard time believing these corn acreage numbers.
  • They used 91.1% of the planted corn acreage being harvested for grain which also seems high given how late the corn was planted and the holes in the fields.
  • The corn yield of 169.5 bu/ac (5th highest) also seems high given the lateness of the crop and the crop conditions.

Soybeans

  • The soybean planted acreage seems low given the reports of farmers planting soybeans extra late to qualify for government payments.
  • They used 98.9% of the soybean planted acreage being harvested which seems high given the lateness of the crop.
  • The soybean yield of 48.5 bu/ac (4th highest) also seems high given how delayed the soybean development has been and the recent drying trend.

These estimates are as of August 1st, so they are about two weeks old. Over the past two weeks the temperatures have been generally seasonal, but the rainfall has been below normal. In the absence of an objective yield survey for this report, the yield estimates were heavily dependent on the subjective yield surveys sent in by farmers.

Farmers are always optimistic about their production, so the farmer estimates may also be optimistic. I would guess that many farmers in the dryer areas were thinking that if they received a couple good rains during August their crops would still be OK. They may or may not receive those hoped for rains. Therefore, it is possible that the yields reported in the August Crop Report could end up being the highest of the year.