The USDA cut its national corn yield forecast by 0.3%, and its soybean yield forecast by 1.4%, compared with last month’s estimates. The move tracks forecasts by Gro’s machine-learning models, whose projections have been below those of the USDA since the start of the growing season.
The revisions in the USDA’s October WASDE report mark the third consecutive month the agency has cut its corn yield estimate, and the second month of soybean yield declines. The USDA will need to further reduce its yield forecasts before final numbers are released in January, according to Gro's Corn and Soybean Yield Forecast Models.
For the past six years, Gro’s US national corn yield estimate has been within 1.7% of the USDA final January report by September, and our soybean yield estimate has been within 0.8% of the USDA’s final number by September for the past three years.
The USDA estimated corn yield of 171.9 bushels/acre. The lowered yield estimate — on top of the smaller acreage planted to corn this year — reduced the agency’s forecast for corn production by 7.8% from last year to 352.9 million tonnes (13.895 billion bushels), the lowest level in three years. For soybeans, the agency estimates yield will decline to 49.8 bu/acre, and production will fall by 3.4% to 117.4 million tonnes (4.313 billion bushels).
The diminished outlook for US corn production — combined with lower beginning stocks that the USDA reported last month — will depress US corn ending stocks for 2022/23 to the lowest level in 10 years. Meanwhile, soybean ending stocks are forecast to be the lowest in seven years, driven by reduced supplies and persistently high incentives for crush demand.
US corn export sales got off to a weak start in the first month of 2022/23, prompting the USDA to cut US corn export demand for the full year to 54.6 million tonnes (2.15 billion bushels), which is 5.5% below last month’s estimate and 13% lower than last year. Brazil's FOB export prices are being offered at a hefty discount to US corn. And low water levels on the Mississippi River, although now a bit improved, have pushed up barge rates and backed up corn shipments at river points, as Gro wrote about here.
The US corn export pace should pick up in the wake of Europe’s drought-hit corn harvest — the WASDE report cut an additional 4.4% from its EU corn production forecast — and amid continued uncertainty surrounding shipments from Ukraine.
Soybean export sales are off to a good start in 2022/23 — total commitments so far are up 9% from a year ago, although recent sales have dropped off due to barge traffic problems on the Mississippi River.
The USDA increased its forecast for Brazil soybean production to a record 152 million tonnes, representing a 2% increase from last month’s estimate and a near-20% jump from last year. Early growing conditions are favorable for Brazil’s soybeans, which are currently being planted, but a third consecutive La Niña could still threaten the crop, as Gro wrote about here.
In wheat, the USDA cut its forecast for Argentina wheat production by 7.9% from last month’s estimate, indicating a 22.2% year-over-year decline on La Niña-driven drought conditions. The agency also reduced US wheat ending stocks to the lowest level in 15 years. Globally, wheat inventories, excluding China, are forecast to drop in 2022/23 to the lowest level in 14 years, marking the third consecutive annual decline in wheat ending stocks outside of China.
The USDA also cut its forecast for world rice supplies for a second month in a row — as reductions in India and Pakistan more than offset higher production in Thailand — indicating global rice ending stocks for 2022/23 will be down 7.4% from last year.