USDA reports bearish; Indiana, Ohio producers could still benefit
June 28, 2013
WEST LAFAYETTE, Ind. - Corn and soybean crops in Indiana and Ohio are in the best shape among the nation's leading production states, according to the latest U.S. Department of Agriculture Crop Progress report.
The condition ratings are welcome news for growers in both states amid falling grain prices after the release of the latest USDA National Agricultural Statistics Service acreage report. The report, released Friday (June 28), showed an increase in U.S. acres from 2012 for both corn and soybeans.
"The real surprise in this report is that we didn't see the shift we expected from corn acres to soybean acres because of delayed planting," said Chris Hurt, Purdue Extension agricultural economist.
The USDA reported national corn acreage is estimated at 97.4 million, up slightly from 2012. Estimated soybean acreage is 77.7 million, up 1 percent from last year.
Hurt estimated that with current crop conditions, U.S. yields would average about156 bushels per acre on corn and 43 bushels per acre for soybeans. However, weather conditions appear to be improving for crop development in the Midwest over the next two weeks and that could improve yield prospects.
Hurt was quick to point out that the report includes both planted and intended acres of each crop. With 6 million intended soybean acres yet to be planted, the final acreage numbers could change.
"These numbers certainly aren't the final numbers," he said.
As is, the report generally is bearish for both corn and soybean prices, which Hurt estimated could fall to about $5 per bushel for the 2013 crop average and $11.75 per bushel on new-crop soybeans. With high production costs this year, these price points would be enough to at least cover many producers' expenses.
Indiana and Ohio producers are in prime position to fare better financially than producers in states where delayed planting was more serious. Strong crop condition ratings now and a near-term favorable weather outlook mean the odds favor above trend yields in these states.
As of Monday's (June 24) USDA Crop Progress report, 82 percent of Ohio's corn crop was rated good to excellent, while 76 percent of Indiana corn rated the same.
Ohio soybeans rated 78 percent good to excellent and 72 percent of Indiana soybeans fell into the same categories.
"Ohio really has the premier corn crop of the major production states as of right now, and Indiana is a close second," Hurt said. "This is very encouraging to producers after suffering through last year's drought."
Recovering production of corn and soybeans in both states and nationwide will mean lower prices compared to those of the 2012 drought, but also less volatile prices.
Very low inventories of old-crop corn and soybeans left end users battling for short supplies, driving up prices. Hurt said higher yields in 2013 would help grain stocks recover.
"Higher production gives us a chance to begin rebuilding more grain inventory, which helps keep prices from being as extreme and volatile," he said. "We've had very low inventories of old-crop corn and soybeans from poor weather in the last three growing seasons, so we've been on pins and needles with the available supplies."
Tight inventories and higher prices can benefit growers, but the combination leaves end users, such as livestock and ethanol producers, to compete for grain. The higher prices keep some of those end users from being profitable.
According to Friday's USDA-NASS Grain Stocks report, the U.S. corn inventory is 2.76 billion bushels, down 12 percent from June 2012. Hurt said it would take a crop of 13 billion bushels to meet basic demands, and he projects this year's crop to come in at 13.8 billion bushels, allowing stocks to build.
Soybean stocks total 435 million bushels, down 35 percent from this time last year. Hurt expects 3.3 billion bushels of soybean production in 2013 which, like corn, would be enough to start adding inventory.
To view all of the USDA-NASS reports, visit http://www.nass.usda.gov
Writer: Jennifer Stewart, 765-494-6682, firstname.lastname@example.org
Source: Chris Hurt, 765-494-4273, email@example.com