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September 14, 2011

Reaction to September 2011 USDA Crop Report

Corn - In the September Crop Report, the USDA estimated the U.S. nationwide corn yield at 148.1 bu/ac with a harvested area of 84.4 million acres and a total production of 12.5 billion bushels. In my report last week I estimated the nationwide corn yield at 148.0 bu/ac with a harvested area of 84.0 million acres and a total production of 12.43 billion bushels.

For the second month in a row the USDA has been aggressive in lowering their estimated corn yield, but they have not adjusted the corn harvested acreage which means that all the acreage adjustments will be in the October Report. I think they will lower the corn harvested acreage along the Missouri River (Missouri, Iowa, Nebraska, and South Dakota) due to flooding as well as the corn harvested acreage in North Dakota due to spring planting delays. Additionally, there may be some minor trimming of the corn harvested acreage in the eastern Corn Belt (Illinois, Indiana, and Ohio). I am going to continue use a corn harvested area of 84.0 million acres, which is 400,000 below the current USDA estimate.

Since the survey for this report was conducted during the last week of August and the first week of September, I don't think the weather has been conducive for higher ear weights. In fact, I think the dryer than normal weather thus far in September in many key growing areas will lead to lighter ear weights in subsequent reports. Some of the key points from the September Report include:

  • Second highest ear count only behind the record ear count of 2009
  • Record high ear counts for Iowa, Illinois, Indiana, Ohio, and Wisconsin. I could agree with record ear counts in Iowa and Wisconsin, but I do not agree with record ear counts in Indian and Illinois.
  • Illinois corn yield down 9 bushels from August, but it still might be a little too high.
  • Wow, Iowa corn yield down 10 bushels, the biggest decline of all the major states.
  • Minnesota has the second highest corn yield only behind Iowa. Southern Minnesota has generally been dry since the survey was taken, which should result in a lower yield in October.
  • Corn harvested acreage unchanged; harvested acreage will decline in October.

Soybeans - In the September Crop Report the USDA estimated the U.S. nationwide soybean yield at 41.8 bu/ac with a harvested area of 73.8 million acres and a total production of 3.08 billion bushels. In my report last week I estimated the soybean yield at 40.0 bu/ac with a harvested area of 73.4 million acres and a total production of 2.93 billion bushels.

The USDA increased the soybean yield from 41.4 in August to 41.8 bu/ac, but I think that increase is very tenuous because the final seed size was not known when the survey for the September report was conducted. The weather during the first two weeks of September has generally been dryer than normal in Indiana, Illinois, Missouri, Kansas, southern Minnesota, eastern South Dakota, southeastern North Dakota, and the mid-South. It has been wetter than normal during the last two weeks in Ohio, southeastern Michigan, parts of Iowa, in Kentucky and Tennessee and along the Atlantic Coast. More areas have been dryer than normal than wetter than normal and as a result I think the soybean seed size will end up being smaller than what they estimated in the September Report, which could result in somewhat lower yields in future reports.

The soybean harvest area was also left unchanged which means that in all likelihood it will decline in the October report. I am going to continue to use a soybean harvested area of 73.4 million acres which is 400,000 below the current USDA estimate. Some of the key points from the September Report include:

  • The Illinois soybean yield is estimated at 48 bu/ac and the Indiana yield is estimated at 42 bu/ac. I think both of these yields are a little too high.
  • The Kansas soybean yield increased 1 bu/ac which seems a little odd since the condition of the crop is lower than a month ago and the state has the worst rated soybean crop.
  • Nebraska soybean yield was increased 3 bu to 55 bu/ac which is 4 bushels better than second place Iowa.
  • Soybean harvested acreage unchanged; harvested acreage will likely decline in October report.

WASDE Increases S. Am. Corn Estimates, Soy Estimates Steady

They were quite aggressive in increasing their South American corn estimates for the 2011/12 growing season. They increased their Brazilian corn estimate 4 million tons from 57 to 61 million tons and they increased their Argentine corn estimate 1.5 million tons from 26 to 27.5 million tons. These WASDE corn estimates are now on the upper end of all the estimates for South America. I am estimating the Brazilian corn crop at 57 to 58 million tons and the Argentine corn crop at 26 to 27 million tons.

While they were aggressive in their South American corn estimates, they left their South American soybean estimates unchanged from last month. They are estimating the 2011/12 Brazilian soybean crop at 73.5 million tons and the Argentine soybean crop at 53.0 million tons. The WASDE estimates for the South American soybean crop puts them in the middle of the pack with other estimates. I am currently estimating the 2011/12 Brazilian soybean crop at 73 to 74 million tons and the Argentine soybean crop at 53 to 54 million tons.