If all of the United States corn crop this year was loaded onto rail cars in one train, that train would have roughly 3.79 million cars.
I’d hate to be at a rail crossing waiting for that to go by.
The U.S. Department of Agriculture last week forecast the American corn crop would have a national average yield of slightly more than 175 bushels an acre, generating a crop of 15.15 billion bushels.
Both those numbers are records, as are the USDA’s forecast for soybean average yield at almost 49 bu. an acre and a crop topping four billion bushels.
The USDA’s numbers exceeded the average of analysts’ pre-report forecasts and you’d think that would have knocked down crop prices.
There was a spike down initially with corn touching a seven year low, but by the end of Aug. 12, the day of the report, corn closed slightly higher and new crop soybean futures were down only 2.25 cents a bushel.
It appears that regardless of what analysts expected, the market had already priced in record corn and soybean production.
The market was also paying attention to hot demand from the export sector as the USDA reported its 12th daily sale of soybeans in 13 days.
And then as this week began, soybean futures jumped higher when the National Oilseed Processors Association’s monthly report showed that soy oil supplies were tighter than expected.
I don’t mean to imply that prices are good. They are not and that is why exports are picking up: end users are stocking up on cheap grain.
But it is comforting that there appears to be less risk of prices falling much further.
But the opportunity for a significant rally is not good either, barring some disastrous weather event.
To put that corn yield forecast into perspective, the projected national average yield of 175.1 is four bushels ahead of the previous record of 171 set in 2014 and 21.6 bu. or 14 percent higher than the five year, 2011-15 average of 153.5 bu.
The highest yields are expected in the states with the largest corn acreage, Iowa and Illinois, where yields are expected to close in on 200 bushels an acre. Last year, Manitoba’s average corn yield was 126.5 bu. an acre.
With the bigger crop forecast, the USDA also increased its expectation of domestic corn consumption and exports.
But even with that, it sees 2016-17 year-end corn stocks rising to 2.4 billion bu., up 41 percent from 2015-16.
U.S. ending stocks represent nearly 17 percent of annual use, the most in 11 years.
U.S. year-end soybean stocks were also increased, to 330 million bushels, but the supply-demand balance there is tighter, at eight percent of annual use.
So that helps to keep the oilseed side of the market, including canola, on a better footing that the grain side.
Turning to wheat, many of you have likely been reading about the disastrous crop in France, the European Union’s largest producer and exporter, and wondering why that is not pushing wheat prices higher.
The USDA supply and demand report provides an explanation.
It slashed EU wheat production to 147.5 million tonnes, down nine million tonnes because of the problems in France.
However, that was more than made up for by a total 11 million tonnes increase in production in Russia, Ukraine and Kazakhstan.
It raised the Canada wheat production forecast one million tonnes to 30 million and also raised Australia by one million to 26.5 million. The U.S. climbed 1.63 million to 63.16 million.
Overall, it sees 2016 global wheat production at 743.44 million tonnes, up almost five million from its July forecast and up 8.6 million from last year.
The USDA expects Russia will reclaim from the European Union the crown of world’s largest wheat exporter, shipping 30 million tonnes compared to the EU’s 27 million.
But early signs are that Russia could also have a low protein crop, compounding an already existing shortage following the disappointing protein levels in the U.S. winter wheat crop harvest.
The USDA expects the U.S. will have a better export year than 2015-16 when its high dollar discouraged shipments, allowing Canada to move past it into third place.
The USDA expects the U.S. this year will export 25.86 million tonnes of wheat and Canada 21.5 million.