USDA Leaves Unchanged Its US Corn, Soy Outlook Despite Growing Drought

The USDA in its June WASDE report left unchanged its estimates for 2023/24 US corn and soybean yields. However, Gro expects the agency will be forced to cut its forecasts as the worst drought conditions in 20 years spread across the Corn Belt. 

The USDA is projecting corn yields at 181.5 bushels/acre, for final production of 387.7 million tonnes (15.265 billion bushels). Its soybean yield estimate, at 52.0 bu/acre, implies production of 122.7 million tonnes (4.510 billion bushels). 

Gro’s machine-learning Yield Forecast Models for corn and soybeans are currently pointing to significantly lower yields than what the USDA is projecting. The Gro models update daily to continuously forecast final end-of-season yields.

Gro’s Vegetative Health Index has tumbled since mid-May for the newly planted US corn and soybean crops, as soil moisture readings dip to their lowest levels since at least 2010. The Gro Drought Index is showing “moderate” drought levels for corn-planted areas, and “abnormally dry” levels where soybeans are planted. 

Gro’s Climate Risk Navigator for Agriculture provides daily updates of these and other key growing conditions and can be weighted for specific crops and regions worldwide. 

Drought conditions for US corn are the worst for this time of year in two decades, as shown by the Gro Drought Index, weighted for areas planted to corn using Gro’s Climate Risk Navigator for Agriculture. The red line shows 2023 values; the blue line is 2022.

For US winter wheat, the USDA slightly raised its forecast from last month’s estimate. The agency now expects the winter wheat harvest will top last year’s total by 3%, at 30.9 million tonnes (1.136 billion bushels). Winter wheat represents about 60% of total US wheat. 

That’s in line with forecasts made by Gro’s US Hard Red Winter Wheat Yield Model, which ticked higher in the past two weeks following much needed rains in the drought-stricken southern Plains.

The USDA gave a small boost to US corn ending stocks for 2022/23 but left new crop corn demand unchanged. In soybeans, the USDA slightly increased US ending stocks for both 2022/23 and 2023/24. Despite the uptick, the soybean stocks-to-use ratio, a measure of available supplies, remains remarkably tight, as seen in this Gro display. 

The July-November soybean spread (S N/X) has widened to a $1.83 inverse on strong domestic demand, as can be seen in Gro’s Futures Spread Application. This spread may be signaling a much tighter situation in soybean stocks than what the USDA is forecasting. 

Globally, the USDA further reduced its estimate for Argentine corn and soybean production by 5.4% and 7.4%, respectively, from last month’s estimate, following that country’s drought-hit season. 

The agency projects global wheat supplies will increase 1.7% in 2023/24, as expected increases in contributions from Argentina, Canada, the EU, and China offset declines from Australia, Russia, and Ukraine. However, Gro believes recent unfavorable conditions in several countries could cut into the USDA’s expected wheat supply gains. 

China’s wheat growing regions got hit with heavy rains late in the season, as seen in this Gro display, degrading grain quality and forcing a larger share of the harvest to be used for animal feed. As a result, the USDA increased its China wheat import forecast to 12 million tonnes in 2023/24, up 14.3% from last month’s estimate.

In addition, Argentina’s new wheat crop is battling continuing drought, as Gro wrote about here. Crops in the EU are suffering from rapidly increasing dry conditions and the destruction of an important dam in Ukraine could have major impacts on wheat production.