USDA's September crop report, released September 12, reduced Iowa's soybean production estimate by nearly 40 million bushels for 2012. But the state's soybean growers remain optimistic about the potential of this year's crop and the future of Iowa's soybean industry. Drought took a toll on Iowa's soybean crop as well as its corn crop this year. Iowa is the nation's largest producer of both corn and soybeans.
The USDA September crop report pegged Iowa soybean production at 368.1 million bushels, down from the August estimate of 405.9 million. USDA's Iowa yield estimate is for an average of 39 bushels per acre compared to last month's estimate of 43 bushels. Iowa harvested 50.5 bushels per acre in 2011.
"I actually think that when harvest is completed, statewide soybean yields will be higher than in this report," says Iowa Soybean Association president Mark Jackson who farms near Rose Hill in southeast Iowa. "Several parts of the state did receive some much needed rain in early August that improved the yield potential of soybeans. The variable maturity of the 2012 crop will keep so-called experts guessing until this crop is in the bin and perhaps beyond."
U.S. soybean production in 2012 forecast to decline 16% from 2011 harvest
The Mahaska County farmer says the challenges posed by this year's growing season also underscores the importance of the ISA to work with all members of the soybean production chain to ensure the necessary investments in research and crop management continue to be made.
Nationally, the USDA is now forecasting soybean production at 2.63 billion bushels, compared to the August estimate of 2.692 billion bushels. The average soybean yield for the United States is now estimated at 35.3 bushels per acre, down from the August forecast of 36.1 bushels per acre.
Kirk Leeds, ISA's chief executive officer, says overall demand remains strong for soybeans, both for the domestic crush sector and for exports. "Current prices have not rationed demand, as evidenced by additional recent purchases from China," Leeds says. "Given such strong global demand, we anticipate the market this winter to continue to send signals to farmers to grow more soybeans."
Projected ending stocks of soybeans are predicted to hit a 16-year low
The USDA forecast for a 16% drop in 2012 soybean production would leave ending stocks at a 16-year low at the end of the 2012-13 soybean marketing season on August 31, 2013. The projection for 115 million bushels of ending soybean stocks is considered bare pipeline. Some market analysts believe it will take prices in excess of $20 a bushel to sufficiently slow demand.
USDA lit a fire under soybean prices last Wednesday with the forecast for a 16% drop in production. The November contract for soybeans rose 44 cents per bushel on September 12 to $17.45 per bushel.
USDA's September forecast projects nation's 2012 corn crop at 10.73 billion bushels, down from 10.78 in August. The U.S. average corn yield is estimated at 122.8 bushels per acre, compared to the August estimate of 123.4 bushels. While USDA reduced its corn yield estimate slightly, to 122.8 bushels per acre, it left its figure for harvested acres at 87.4 million acres. That surprised many analysts who had figured on a lower harvested acres number in light of the damage done to the crop this summer across the Corn Belt. Corn on September 12 dropped 8 cents per bushel for the December contract to $7.69, a six-week low.
For Iowa, total corn production is estimated at 1.9 billion bushels, compared to the August report's 1.92 billion bushels. Iowa's average expected yield is estimated at 140, down from 141 bushels per acre forecast in August. Iowa, the nation's leading corn producing state, has averaged 172 bushels per acre the last three years.
USDA raises estimates for U.S. corn supply for 2012-13 marketing year
More U.S. corn will be available in 2012 and 2013 than previously anticipated, according to USDA. Despite reductions to the corn production forecast, revised forecasts indicating higher projected carry-in increased overall supply estimates by 108 million bushels.
USDA cooled prices further by saying corn used for feed would drop from 4.4 billion to 4 billion bushels as the supplies of cattle and poultry shrink. Ethanol demand for corn will decline as well, from 5 billion bushels last year to 4.5 billion bushels. The market got confirmation with a U.S. Department of Energy report that ethanol production in the U.S. dropped from 816,000 barrels a day the previous week, the lowest production in six weeks. High corn prices are also taking their toll on exports, which already have dropped from 1.8 billion bushels in 2010 to an expected 1.35 billion bushels this year and 1.25 billion bushels in 2013.
Carryover stocks of corn on August 31, 2013 are forecast to be 650 million bushels. By contrast, in the last year the U.S. suffered a severe drought, which was in 1988, the U.S. had more than 4 billion bushels of corn in reserve.
"These latest USDA estimates released on September 12 illustrate how, even under such adverse conditions, U.S. corn farmers provide the corn that our nation needs," says National Corn Growers Association President Garry Niemeyer, a grower in Illinois. "Additionally, the increased overall supply further shows what our members have understood all along, that you cannot count the corn before it is harvested. In light of this, I hope that cooler heads prevail both in the media and our government. With harvest less than a quarter complete, we need to wait patiently for a clearer picture of the crop to emerge."