US sees crop records for corn, soy - but not wheat

The US is poised for record corn and soybean harvests this year, but a disappointing wheat crop, thanks to the "severe to exceptional drought" affecting most of the southern Plains.

The US Department of Agriculture, in its first full forecasts for crops in 2014-15, pegged the domestic corn crop at 13.935bn bushels (354,0m tonnes), up 10m bushels year on year, despite a forecast of a 3.7m-acre drop in plantings, and slow progress in early sowings.

In fact the USDA, saying hopes for higher corn yields were "more than offsetting the year-to-year reduction in planted area", said it was assuming that farmers catch up on sowings delays, with many observers believing growers have made strong progress this week.

The US soybean crop was estimated at a record 3.78bn bushels (98.93m tonnes), up 261m bushels year on year, boosted by all-time highs in both plantings and yield.

The US is the world's largest producer of both crops, and is expected indeed to increase its lead in soybeans over second-placed Brazil, for which a 91m-tonne harvest was forecast.

'Drought, winterkill, and freeze damage'

However, the wheat crop was pegged at an eight-year low of 1.96bn bushels (53.43m tonnes), a decline of 167m bushels year on year, a bigger drop than investors had forecast from the Wasde.

USDA US wheat estimates, change on previous and (on market forecast)

End-stocks 2013-14: 583m bushels, unchanged, (-5m bushels)

End-stocks 2014-15: 540m bushels, n/a, (-13m bushels)

Hard red winter output: 746.16m bushels, n/a, (-35.8m bushels)

Soft red winter output: 447.09m bushels, n/a, (-19.9m bushels)

The decline reflected setbacks to winter wheat in the Midwest and, in particular, the southern Plains hard red winter wheat belt, where "drought, winterkill, and freeze damage have impacted the potential yield results", the USDA said.

The hard red winter crop, which accounts for most of US wheat production, was pegged at 746.2m bushels, up only 2.1m bushels year on year, despite higher sowings and a figure below market forecasts.

"Most of the wheat growing areas in the southern Great Plains are in severe to exceptional drought stages," the USDA said.

'Winterkill losses'

However, setbacks were noted elsewhere too, including in California, where "producers are expected to harvest a record- low acreage due to exceptional drought in the winter wheat growing area".

USDA US corn estimates, change on previous and (on market forecast)

End-stocks 2013-14: 1.146bn bushels, -185m bushels, (-168m bushels)

End-stocks 2014-15: 1.726bn bushels, n/a, (+54m bushels)

And the harvest of soft red winter wheat - a lower protein variety used for the likes of making biscuits and livestock feed, an the benchmark type traded in Chicago - was pegged at 447.1m bushels, down 21% year on year, also a bigger decline than expected by investors.

Although a dent to production from lower sowings had been expected, the USDA also highlighted "winterkill losses… across Illinois, Missouri, and Michigan where cooler-than-normal spring temperatures coupled with higher-than-normal precipitation throughout the winter, hampered crop development".

Price impact

The production setbacks looks likely to underpin wheat prices, with farmers expected to receive $6.65-7.95 a bushel for the grain over 2014-15, compared with an average of $6.85 a bushel this season.


USDA US soybean estimates, change on previous and (on market forecast)

End-stocks 2013-14: 130m bushels, -5m bushels, (-4m bushels)

End-stocks 2014-15: 330m bushels, n/a, (+23m bushels)

owever, record harvests look set to ensure corn and soybean growers weaker prices.

Producers will receive $9.75-11.75 a bushel for this year's crop of soybeans, below the $13.10 a bushel this season.

For corn, they will get $3.85-4.55 a bushel, compared with $4.50-4.80 a bushel expected for 2013-14.

In Chicago, new crop December corn, which had stood little changed before the report was published, tumbled to stand 2.0% lower at $5.08 ¾ a bushel an hour after the report was released.

New crop November corn was 0.5 cents higher at $12.24 ½ a bushel.

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