For the first time in a long time, a big U.S. soybean crop may not be getting bigger, according to the latest crop production estimates released by USDA. The monthly October Crop Production report issued Oct.12 forecasts the nation’s 2017 soybean production at a record 4.43 billion bushels, down slightly from the September estimate, but up 3% from last year.
Based on Oct. 1 conditions, yields this fall are expected to produce a national average of 49.5 bushels per acre, down 0.4 bushel from last month and down 2.5 bushels from last year. Area for harvest this fall in the U.S. is estimated at a record-high 89.5 million acres, up 1% from September and up 8% from 2016. In Iowa, the yield is forecast at 56 bushels per acre, down 1 bushel from September’s estimate.
Focus on demand, South America production
In a surprising move, USDA’s World Agricultural Supply and Demand Estimates, also released Oct. 12, lowered its forecast for ending stocks by 45 million bushels for the 2017-18 crop marketing year. The 2017-18 marketing year ends Aug. 31. USDA said ending stocks would total 430 million bushels, down from 475 million projected in September.
Soybean prices on the Chicago Board of Trade spiked nearly 30 cents shortly after the report’s release, while traders quickly shifted their attention to planting progress in South America.
Iowa Soybean Association staff, farmer members and market analysts offered the following perspectives on the heels of the Oct. 12 USDA report:
• What will happen with demand? “The bottom line is we’ve got a good handle on yields for 2017 and production has stabilized. Demand is steady and strong. The question then becomes: will demand be even stronger than projected right now? Because demand is so strong, if there are any weather issues in South America, that would attract additional purchases from the U.S. All eyes are on demand and South America right now.” — Grant Kimberley, ISA director of market development
• Watch the weather. “Even though we have surplus soybeans, demand is starting to cut into that carryover so any little hiccup in the weather anywhere will send the market higher. We also should be cognizant that we’re starting to get behind on harvest. If this wet, cold weather continues, it’s going to affect the quality of the soybeans coming out of the field, which could be another market mover.” — Dean Coleman, ISA member and farmer near Humboldt in northern Iowa
• It’s the tale of two different crops. “On the corn side, we were hoping to hold the number steady but instead, we have more production. That said, global carryover was lower so the USDA report is viewed as neutral to slightly friendly for corn. Alternatively, for soybeans, I don’t expect too much more adjustment to the upside on U.S. production for 2017 crop, as this crop is slower to mature than usual. For this reason, the overall soybean report is positive. From here, I’m concentrating on usage including feed demand and biofuels—for clues to future direction on soybean price. The soybean export number is still projected to be a record and growing. Can we keep up the record U.S. exports in soybeans? That question will be answered by China.” — Chad Hart, Iowa State University Extension economist specializing in grain marketing