USDA lowers yield forecast in October report10/10/2019 |
By Bethany Baratta, ISA senior writer
It’s too early to determine how Iowa’s soybean crop will shape up. Therefore, today’s crop production and estimate reports from the U.S. Department of Agriculture’s (USDA) are still moving targets.
“Due to late-maturing crops and a slow start to harvest, the January report will be more telling of this year’s crop,” said Grant Kimberley, Iowa Soybean Association’s (ISA) director of market development. “The combine will be the gauge.”
The USDA pegged Iowa soybean production at 483.9 million bushels, down 12 million bushels from last month’s forecast and 66.6 million acres from October 2018. The average Iowa yield is projected at 53 bushels per acre, a 1-bushel-per-acre decrease from last month, according to the crop production report.
U.S. soybean production is forecast at 3.55 billion bushels, down 2 percent from the September forecast and down 20 percent from October 2018, according to the USDA’s crop production report. Based on conditions as of Oct. 1, yields are expected to average 46.9 bushels per acre, down 1 bushel from last month and down 3.7 bushels per acre from 2018.
Area harvested for beans in the United States is forecast at 75.6 million acres, down less than 1 percent from the previous forecast and down 14 percent from 2018, according to the report.
November futures soybean prices settled at $9.22 per bushel after hitting a high of $9.34 after the report’s release.
In today’s World Agricultural Supply and Demand Estimates (WASDE) report, the USDA lowered soybean supplies 175 million bushels (to 4.5 billion bushels) on lower production and beginning stocks.
The USDA increased soybean crush 5 million bushels to 2.12 billion bushels. Exports were left unchanged at 1.77 billion bushels.
The reports are met with a bit of skepticism after the USDA made a large revision to its 2018 reports just last month.
“I think they’re pretty close, but the way the USDA has jumped around with changing ending stocks and yield estimates, I still think we’re in a bit of no man’s land of where we’ll end up,” said ISA District 8 Director Randy Miller.
What to watch
Cory Bratland, a trader with Kluis Commodity Advisors in Willow Lake, South Dakota, said some key factors will help guide the soybean market.
- “The old saying, ‘Small crops get smaller’ could come into play again,” Bratland said.
- Wet conditions—including snow in some areas—could be a factor in how much gets harvested. “We don’t have a lot of bushels now to give up,” Bratland said.
A slower start to harvest—combined with rainy weather last week and this week—has pushed soybean harvest behind other years. As of Oct. 7, just 5% of the Iowa soybean crop had been harvested, 12 days behind average, according to the Iowa Crop Progress and Conditions report released by the USDA National Agricultural Statistics Service (NASS).
- China trade negotiations. If the United States and China get a deal, it will benefit soybeans.
Face-to-face trade talks between Chinese Vice Premier Liu and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are currently underway in Washington, D.C., according to reports.
That’s good news for U.S. agriculture, especially soybeans. The USDA this morning announced the sale of 398,000 metric tons of U.S. soybeans to China. This week’s sale adds to the 2 million tons of soybeans sold to China during September.
“It’s been positive seeing China back to buying soybeans lately, and I hope that trend continues,” Kimberley said. “That hinges on whether a trade deal can be put together during these negotiations.”
- South America planting/crop progress. “The United States needs to capitalize in the next 4 to 6 months and sell as many beans as we can. In February, South America will take over as No. 1 supplier of soybeans as they’ve ramped up production,” Bratland said.
U.S. soybean ending stocks for the 2019-20 marketing year, which began Sept. 1, are projected at 460 million, according to the report. The average price for soybeans increased 50 cents to $9 per bushel, reflecting smaller projected supplies.
“Today’s report was positive from the standpoint of stimulating the prices moving higher, but we still have a pile of beans to get rid of,” Miller said. He started his soybean harvest on his farm near Lacona on Wednesday.
The work continues to sell more beans abroad, Kimberley said. A U.S. Soybean Export Council (USSEC) -sponsored delegation is set to travel to Europe to promote U.S. soybeans. A delegation of several midwestern state soybean associations—including ISA—is planning a mission to Southeast Asia to promote U.S. soybean meal, Kimberley said.
“In the meantime, the U.S. soybean industry will work to diversify and grow our market share in the rest of the world,” Kimberley said.
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