Corn and soybean price increases primarily due to the aftermath of the derecho storm
LAKE CRYSTAL, Minn. — The August 12 USDA Crop Report projected a record U.S. corn yield and record production in 2020, as well as a record 2020 soybean yield and the second highest U.S. soybean production level in history. The yield and production projections were based on conditions as of August 1. Normally, the record crop yields and high production levels would be quite “bearish” on grain markets following the report; however, corn and soybean prices actually rose after the release of the August 12 report.
The corn and soybean price increases were primarily due to the aftermath of the derecho storm that ripped through the heart of the Midwest Corn Belt on August 10, two days prior to the USDA report. The storm went across the entire State of Iowa from west to east, in addition to causing damage in portions of Nebraska, Illinois, Indiana, and Wisconsin. It is estimated that one-third of Iowa’s crop land was impacted by the storm that had straight-lined winds of 80-100 mph or more. Iowa has over 14 million acres of planted corn in 2020 and produced 19 percent of the total U.S. corn production in 2019. The storm also did considerable damage the grain handling and storage facilities, as well as homes and other farm buildings. It is still too early to evaluate the impact of the storm on statewide corn and soybean yields in Iowa and other States.
The August 12 USDA Crop Report estimated the 2020 total U.S. corn production at 15.3 billion bushels, which would be an increase of 12 percent from the 2019 production level of 13.6 billion bushels. The 2020 projected U.S. corn production compares to approximately 14.4 billion bushels in both 2018 and 2017 and the current record U.S. corn production of 15.2 billion bushels in 2016. USDA is estimating 2020 total U.S. corn acreage harvested for grain at 84 million acres, which is in increase of 3 percent from the 81.3 million harvested corn acres in 2019.
The latest Crop Report projects the national average corn yield in 2020 the record level of 181.3 bushels per acre, which compares to 167.4 bushels per acre in 2019, 176.4 bushels per acre in 2018, and the current record U.S. average corn yield of 176.6 bushels in 2017. Many private grain marketing analysts are projecting similar national corn yield levels to the corn yield in the USDA report. It will be interesting how much yield impact there will be in future reports from the derecho storm that flattened and snapped a significant number of corn acres in the Midwest.
USDA is estimating Minnesota’s 2020 average corn yield at a record level of 197 bushels per acre, which surpassing the current record corn yield of 194 bushels per acre in 2017. The 2020 State average corn yield also compares to 173 bushels per acre in 2019, 182 bushels per acre in 2018, and 193 bushels per acre in 2016. USDA is projecting Iowa’s 2020 average corn yield at 202 bushel per acre, which is above the 198 bushels per acre in 2019 and 196 bushels per acre in 2018, but would match the 202 bushel per acre yield in 2017 and be just shy of current the record State corn yield of 203 bushels per acre in 2016. Of course, the impacts from the derecho storm could lower Iowa’s 2020 final yield.
The 2020 USDA corn yield estimates for the other major corn producing States are Illinois at 207 bushels per acre, compared to 181 bushels per acre in 2019, Indiana at 188 bushels per acre, compared to 169 bushels per acre in 2019, and Nebraska at 191 bushels per acre, compared to 182 bushels per acre in 2019. South Dakota’s 2020 corn yield is estimated at 167 bushels per acre, compared to 144 bushels per acre in 2019; with North Dakota at 155 bushels per acre, compared to 131 bushels per acre in 2019; and Wisconsin at 181 bushels per acre, compared to 166 bushels per acre in 2019.
The USDA Report on August 12 estimated total 2020 U.S. soybean production at 4.42 billion bushels, which is an increase of 25 percent from the 2019 production level of 3.55 billion bushels. Other recent U.S. soybean production levels are the record production level of 4.54 billion bushels in 2018, 4.39 billion bushels in 2017 and 4.3 billion bushels in 2016. USDA is now estimating total 2020 harvested soybean acreage at 83 million acres, which compares to just below 75 million acres in 2019
USDA is projecting the 2020 U.S. average soybean yield at the record level of 53.3 bushels per acre, which would best the current record U.S. average soybean yield of 52.1 bushels per acre in 2016. The 2030 estimated U.S. soybean yield compares to recent national average soybean yields of 47.4 bushels per acre in 2019, 51.6 bushels per acre in 2018, and 49.1 bushels per acre in 2017. Minnesota’s 2020 average soybean yield is estimated at 51 bushels per acre, which compares to 44 bushels per acre in 2019, 48 bushels per acre in 2018, 47 bushels per acre in 2017 and the record State soybean yield of 52.5 bushels per acre in 2016. Iowa is projected to have a 2020 soybean yield of 58 bushels per acre in 2020, compared to 55 bushels per acre in 2019, 57 bushels per acre in 2018, 56.5 bushels per acre in 2017 and the State record of 60.5 bushels per acre in 2016.
Other projected 2020 yields in major soybean producing States include Illinois at 64 bushels per acre, compared to 54 bushels per acre in 2019; Indiana at 61 bushels per acre, compared to 51 bushels per acre in 2019; and Nebraska at 62 bushels per acre, compared to 58.5 bushels per acre in 2019. South Dakota is projected to have a 2020 soybean yield of 50 bushels per acre, compared to 42.5 bushels per acre in 2019; with North Dakota at 36 bushels per acre, compared to 31.5 bushels per acre in 2019; and Wisconsin at 54 bushels per acre, compared 47 bushels per acre in 2019.
AUGUST 12 WASDE REPORT
The updated USDA World Supply and Demand Estimates (WASDE) Report was also released on August 12. This report included the 2020 estimated U.S. corn production of 15.3 billion bushels, with an increase in the 2020-21 corn ending stocks compared to the July estimate. The 2020-21 corn ending stocks are now estimated at just over 2.75 billion bushels, compared to the projected 2019-20 corn ending stocks of 2.23 billion bushels. The report showed an increase in expected corn usage for feed, ethanol production, and exports for 2020-21, compared to estimated final 2019-20 levels.
USDA is projecting an average on-farm corn price for the 2020-21 marketing year, which runs from September 1, 2020, through August 31, 2021, at $3.10 per bushel, which is a decline from the $3.35 per bushel estimate in July. The 2019-20 national average corn price, which will be finalized on September 30, 2020, is now estimated at $3.60 per bushel, which compares to national average prices of $3.61 per bushel for 2018-19 and 2015-16 and $3.36 per bushel in both 2017-18 and 2016-17.
The recent WASDE report used the 2020 U.S. soybean production level of 4.42 billion bushels and increases in 2020-21 soybean crush levels and exports from 2019-20 levels. The resulting estimated 2020-21 soybean ending stocks are 610 million bushels, which would be almost the same as the estimated 2019-20 ending stocks of 615 million bushels. USDA is now projecting an average on-farm soybean price for the 2020-21 marketing year at $8.35 per bushel. The 2018-19 final national average soybean price is estimated at $8.55 per bushel, which compares to 12-month national average prices of $8.47 per bushel in 2018-19, $9.33 in 2017-18, and $9.47 per bushel in 2016-17.
Last modified: 08/22/2020
