Friday the U.S. Department of Agriculture reduced both its corn and soybean production estimates in its Sept. 12 report. And it may only be the start of further reductions ahead with the poor growing conditions in August and the late start to this year's growing season.
At 12.1 billion bushels, USDA's September Crop Production report reduces production 216 million bushels on lower expected yields. The forecast yield of 152.3 bushels per acre is down 2.7 bushels from last month. Soybean production is forecast at 2.93 billion bushels, down 1% from the August forecast but up 13% from last year.
Farm Progress market analyst Arlan Suderman says with so many unknown factors many in the trade were discounting the September report before it was even released because of USDA's recent track record of raising estimates in September and lowering them in October.
"There was almost a 'Yes we expect those yields to drop but we fear USDA may raise their estimates' type of reaction," Suderman says. "When USDA actually made significant cuts to yield estimates, particularly significant for corn, which is rare unless there is a big drop in crop rating. That really set the tone; it told end-users that downside risk was probably limited, but USDA has cut their yield estimate, with more cuts likely."
Although USDA did cut soybean yields, Suderman says a lot of uncertainty remains because soybeans could benefit the most from September rains, but are also most vulnerable to adverse weather conditions.