MORE ACREAGE AND BIGGER YIELDS

USDA projects record crops for corn, soybeans in 2023

By KRISTIN DANLEY-GREINER

The February commodity outlook report from the U.S. Department of Agriculture indicates an increase in corn and soybean production for 2023. That can be attributed to more acreage and a bigger yield for the corn crop and the same acreage but a better yield for soybeans.

“Either way, we’re adding to production no matter where the USDA is at right now. They’re projecting record crops for both corn and beans. They’re not outlandishly large records, but the idea is, for the most part, that we’re passing what we predicted in 2021, which was a strong production year despite the drought,” said Chad Hart, Iowa State University Extension agriculture economist.

The report indicates 15 billion bushels of corn and 4.5 billion bushels of soybeans produced in 2023. That means there will be plenty of supply when approaching this fall and harvest.

“If we do get record crops, that will lead to price erosion. The USDA right now is showing the corn price backed off from the 2022 crop, falling just barely out of the teens. We’re seeing some build-back in feed demand but not completely as in 2021. We’re showing ethanol demand flat, sweetener demand flat and a small bounceback in export demand,” Hart said.

Export demand could bump up as the weather pattern in Argentina and Brazil is falling apart. So instead of the droughtdriven La Nina, things likely will change and Argentina’s crop will bounce back, Hart indicated.

“Argentina’s suffering through a drought like we have been, but in Brazil, they’ve seen incredibly strong crops the last couple of years,” Hart said.

Andrew Wheeler, spokesperson for the Iowa Farm Bureau Federation, said the corn market continues to weaken from the recent highs set in June 2022 and currently is nearly 20 percent below that high.

“USDA projects corn exports for the current marketing year will be 22 percent less than last year and 30 percent below the levels seen two years ago, which is due in large part to strong competition in the corn export market from the Black Sea area and Brazil,” Wheeler noted.

Domestic feed demand for corn is also down from a year ago, with USDA forecasting a 7.7 percent drop in feed demand. This is due in large part to beef production in January down 7.6 percent from a year ago and total red meat production down 2.5 percent from a year ago.

Corn use for ethanol is also forecast to decline this year by 1.5 percent, he said.

The 2022 corn crop was 1.3 billion bushels smaller than the 2021 corn crop and the relatively high prices seen during the summer and fall of 2022 are beginning to ration demand, Wheeler said. Total corn utilization for the 2022-2023 marketing year is expected to decline by more than 1 billion bushels.

“The soybean market peaked in June 2022 and after a sharp break in JulyAugust 2022 has been slowly working its way back toward the June 2022 highs as the Argentinian soybean crop withered in heat and dryness,” Wheeler indicated.

The 2022 rally in soybean prices was led by strong demand for soybean oil as soybean oil prices reached all-time highs last year. Shortly after, demand for soybean oil weakened and dropped 40 percent before finding an equilibrium price level. Whole soybean exports from the U.S. are forecast to decline by 7.8 percent this year and with Brazilian soybean harvest moving forward at a rapid pace, world and U.S. soybean prices have softened in the past week, dropping 80 cents per bushel in the past week.

Grant Kimberley, executive director of the Iowa Soybean Association, said that looking at carryover, things are still tight for soybeans unless producers see significantly higher yields with high acres for corn and beans.

“We’re not going to see a big change from what was already planted last fall. Inputs have come down a little bit recently, more so on the fertilizer side, but are still pretty high. We aren’t seeing overly attractive price levels when we look at how expenses are, so that could be a red flag for the ag economy and farmers’ profitability,” Kimberley said. “It will be interesting to see if the recent pull back in prices does spur a little more demand.”

Larry Buss, president of the Iowa Corn Promotion Board from western Iowa, added that the weather will continue to impact crops in his area and markets.

“In my territory, after the 2022 crop season we had a root zone with zero moisture. The drainage ditches all dried up in Missouri Valley. I did excavating work on my farms in western Iowa and felt nothing in the top five feet. Since this winter, we’ve picked up probably five to six inches of moisture in the form of rain or snow,” Buss said. “We’re one of the drier parts of the state. If we transition to an El Nina, it could cost us dollars as far as getting the crop planted on time.”