In the past week, the USDA released its supply and demand report that cut U.S. corn yields but still predicts record crop corn production and carryout.
In the report, the USDA cut the U.S. average corn yield by 5 bushels per acre from its February estimate to 158 bu./acre, says Keith Gehling, risk management specialist with AgriSource. That is largely based on the cold and wet spring that has delayed planting across the country.
Despite the yield cut, the USDA predicted U.S. farmers will produce their first 14-billion bu. corn crop. Gehling notes that is more than 1 billion bu. over the previous record.
With the predicted demand, that would mean a 2-billion bu. carryout at the end of August 2014.
On the soybean side, the USDA predicted a record yield of 44.5 bu./acre. That would produce a record 3.39-billion bu. crop. The previous record was 3.36 billion bu. in 2009.
However, Gehling notes traders question if the production will be realized. He says there has been talk of farmers switching wet corn acres to beans.
“There is some talk of less double-crop beans,” he says. That is due to the delayed wheat development and wet weather.
On the corn side, the question of how much the wet weather will cut yields is being discussed.
Gehling says farmers in Southeast Iowa and other places did not turn a wheel for 11-12 days.
University research has shown after May 19, corn yields are cut 1 percent per day, he notes. In addition, as the planting window starts to close, farmers are planting in less-than-ideal conditions.
He says that means old-crop corn might have to be stretched from the middle of August until the first of October.
Gehling’s company is advising clients to be patient and sell into price rallies for old and new crop for corn and soybeans.