August 15, 2016

AUGUST 12  USDA  REPORT  ESTIMATES  RECORD  CROP  PRODUCTION

There was a lot of anticipation leading into August 12 USDA Crop Report, due to the very favorable  crop conditions that existed in many of the primary corn and soybean production areas in the United States. Even though parts of Southwest Minnesota, Northwest Iowa, and Eastern South Dakota dealt with very wet conditions and late planting this Spring, and some areas of South Central and Central Minnesota had excessive rainfall amounts in June, the overall growing conditions in many portions of the Upper Midwest have been quite favorable.

The USDA Crop Report issued on August 12 estimated the 2016 total U.S. corn production at an all-time record level of 15.15 billion bushels, which would be an increase of 11 percent from the 2015 U.S. corn production level of 13.6 billion bushels. The 2016 projected corn production would best the previous record U.S. corn production of 14.2 billion bushels in 2014, and compares to 13.9 billion bushels in 2013, and 10.8 billion bushels in the drought-year of 2012. Based on August 1 conditions, USDA is estimating 2016 total harvested corn acreage in the U.S. at 86.6 million acres, which is unchanged from June USDA estimates, but is a substantial increase from the 2015 level of harvested corn acres at 80.7 million acres, or 83.1 million acres in 2014.

The August 12 Crop Report projects a record national average corn yield for 2016 of 175.1 bushels per acre, which is 4.1 bushels per acre higher than the previous record corn yield of 171.0 bushels per acre in 2014. The 2015 national average corn yield was 168.4 bushels per acre, and other recent national yield levels were 158.8 in 2013, and 123.4 bushels per acre in the drought-year of 2012. The USDA projected national average corn yield was higher than the average national yield estimates of most grain marketing professionals.

USDA is estimating Minnesota’s 2016 average corn yield at 184 bushels per acre, which is 4 bushels below the record State average corn yield of 188 bushels per acre in 2015. Other recent State average corn yields are 158 bushels per acre in 2014, 160 bushels per acre in 2013, and 165 bushels per acre in 2012. Prior to 2015 and 2016, the previous record average corn yield in Minnesota was 177 bushels per acre in 2010. USDA is now projecting Iowa’s 2016 average corn yield at the record level of 197 bushels per acre, which would surpass last year’s record State average corn yield of 192 bushels per acre. Other recent average corn yields in Iowa are 178 bushels per acre in 2014, 165 bushels per acre in 2013, and the drought-reduced yield of 137 bushels per acre in 2012.

The 2016 USDA corn yield estimates for the other major corn producing States are Illinois at 200 bushels per acre, compared to 175 bushels per acre in 2015; Indiana at 187 bushels per acre, compared to 150 bushels per acre in 2015; and Nebraska at 187 bushels per acre, compared to 185 bushels per acre in 2015. South Dakota’s corn yield is estimated at 147 bushels per acre, compared to 159 bushels per acre in 2015, with North Dakota at 135 bushels per acre, compared to 128 bushels per acre in 2015.

The USDA Report on August 12 estimated total 2016 U.S. soybean production at a record level of  4.06 billion bushels, which would be slightly above the previous record U.S. soybean production of 3.929 bushels in 2015, and above the 3.927 bushel production level in 2014. USDA is now estimating total 2016 harvested soybean acreage at 83.0 million acres, which compares to 81.8 million acres in 2015. Some experts again feel this number could be lowered in future months, due to the prevented planted acres and drown-out acres in portions of the Upper Midwest.

The U.S. average soybean yield for 2016 is estimated at the record level of 48.9 bushels per acre, surpassing the previous record yield of 48.0 bushels per acre in 2015, and also above the national average soybean yield of 47.5 bushels per acre in 2014. Minnesota’s 2016 average soybean yield is estimated at 47 bushels per acre, which compares to a record State soybean yield of 50 bushels per acre in 2015. Iowa is projected to have a record average soybean yield of 57 bushels per acre in 2016, breaking last year’s State record soybean yield of 56.5 bushels per acre.

Other projected 2016 yields in major soybean producing States include Illinois at 57 bushels per acre, compared to 56 bushels per acre in 2015; Indiana at 55 bushels per acre, compared to 50 bushels per acre in 2015; and Nebraska at 59 bushels per acre, compared to 58 bushels per acre in 2015. South Dakota is projected to have a 2016 soybean yield of 42 bushels per acre, compared to 46 bushels per acre in 2015, and the 2016 North Dakota soybean yield is estimated at 33 bushels per acre, compared to 32.5 bushels per acre in 2015.

AUGUST 12  WASDE  REPORT

The updated USDA World Supply and Demand Estimates (WADSE) were also released on August 12, which included the 2016 estimated U.S. corn production of 15.15 billion bushels. The Report had minor adjustments in the beginning corn stocks and showed increases in expected corn usage for feed, ethanol, and exports in 2016-17, resulting in projected corn ending stocks at the end of the 2016-17 marketing year of 2.4 billion bushels. This would be the highest level of corn ending stocks since the 1987-88 crop year. By comparison, corn ending stocks are estimated to be near 1.7 billion at the end of the 2015-16 marketing year on August 31, 2016, which is similar to the 2014-15 ending stocks.

USDA is projecting an average on-farm corn price for the 2016-17 marketing year, which runs from September 1, 2016, through August 31, 2017, in a range of $2.85 to $3.45 per bushel, with an average expected price of $3.15 per bushel. The August estimated average 2016-17 corn price was lowered by $.25 per bushel from the July price estimates, and if achieved, would be the lowest national average corn price in over a decade. The 2015-16 national average corn price, which will be finalized on September 30, 2016, is now estimated at $3.60 per bushel, which compares to national average prices of $3.70 per bushel for 2014-15, $4.45 per bushel for 2013-14, and $6.89 per bushel for 2012-13.

The recent WADSE estimates are projecting a large U.S. soybean production of slightly over 4 billion bushels in 2016, with some increases expected the soybean crush and exports. If achieved, this would result in estimated 2016-17 soybean ending stocks at 330 million bushels, which is up 40 million bushels from the July WADSE estimate. USDA is estimating 2015-16 soybean ending stocks at 255 million bushels, which is considerably higher than the 2014-15 ending stocks of 191 million bushels.

USDA is now projecting an average on-farm soybean price for the 2016-17 marketing year in a range of $8.35 to $9.85 per bushel, with an average expected price of $9.10 per bushel. Similar to corn, the August estimated 2016-17 soybean price was lowered by $.40 per bushel from the July estimate.  The 2015-16 final national average soybean price is estimated at $8.95 per bushel, which compares to 12-month national average prices of $10.10 per bushel in 2014-15, $13.00 per bushel for 2013-14, and $14.40 per bushel for 2012-13.

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Note — For additional information contact Kent Thiesse, Farm Management Analyst and

Vice President, MinnStar Bank, Lake Crystal, MN.  (Phone — (507) 381-7960);

E-mail — kent.thiesse@minnstarbank.com)