Weather Hurts US Corn, Bean & Wheat Yields Tightening Stocks

Market Analysis

After higher-than-expected US August crops since 2014, the USDA output forecasts were lower than the trade’s estimates for the three major crops this month. These smaller outputs in corn and wheat led to lower 2021/22 stocks projections while soybean new-crop carryover was left unchanged. Reduced world crops in Brazil (corn 6.5 mmt). Russia (wheat 12.5 mmt) and Canada (wheat 7.5 mmt) added to corn & wheat’s support after the report.

Despite the trade’s 1.9 bu lower US corn yield forecast because of this year’s below normal G/E ratings; the US August corn yield declined 4.9 bu to 174.6 from the USDA’s 179.5 July trendline level. The contrast within the Corn Belt was dramatic. The ECB’s average yield is at 196.5 bu, up 5.3 from its previous regional high while the WCB’s 169.8 bu forecast is the lowest since 2014’s 167.8 yield. IL’s’ 214 corn yield vs ND’s 106 bu level is quite a spread. Overall, August’s 254 million bu miss by the trade was largest since 1997. A boost in food & ethanol corn demand reduced the impact of old-crop’s sluggish export demand. Despite 100 million reductions in both new-crop feed and export demand, corn’s 2021/22 stocks were still cut by 190 million to 1.242 billion bu because of smaller supplies.

The USDA also projected a 36 million smaller US August soybean crop than the trade. Their 50 bu yield was 0.8 bu less than July & 0.4 bu below the trade resulting in 4.339 billion bu crop. Sluggish old-crop demand prompted the USDA to increase beans old-crop carryover by 25 million. These supplies along with 20 million lower crush & export demand each kept US new-crop bean stocks unchanged. The USDA reduced wheat’s total output this month, but they cut WW production while leaving spring wheat’s output generally unchanged. Cuts in hard red (Montana) and white (WA & ID) wheat yields dropped WW’s US output by 45.5 million. This sliced the US crop to 1.697 billion which tighten US stocks to 627 million bu., lowest since 2013/14. Russia & Canada’s smaller crops cut the world’s output to 776.9 mmt & stocks to 279 mmt; the lowest since 2018/19.

What’s Ahead

Given the generally low US 2021/22 carryovers, the remaining 2021 US growing season will remain important. This is particularly true in the drought-stricken Western Midwest. The annual Pro Farmer crop tour begins next week. This year’s first data-gathering event will be taking field samples from corn and soybean fields from Ohio to S. Dakota. Continue to hold 2021/22 grain & oilseed sales at 20-25%.