US too low on corn, soy yield but overstating area

The US may be underestimating its corn and soybean production prospects on yield, but is overestimating plantings, Macquarie said, adding to the evidence of crop tours released to the market.

The bank backed the consensus that the US Department of Agriculture is underestimating US corn and soybean yield potential, even after upgrading its forecasts last week to 167.5 bushels per acre for the grain and 45.4 bushels per acre for the oilseed.

"Our tour showed, as expected, the record-breaking potential of this season's crop," Macquarie analyst Chris Gadd said, flagging in particular prospects for eastern Corn Belt such as Illinois, where crops appeared "unbelievably good".

Factoring in some potential for disappointment in Minnesota and northern Iowa, where dryness has curtailed potential, Macquarie forecast the corn yield at 170.3 bushels per acre, and the soybean result at 45.8 bushels per acre, both record highs.

'Very high assessment'

The result comes amidst a series of Midwest crop tours, with Lanworth on Monday estimating the US corn yield at a record 174.8 bushels per acre, and soybean yield at 46.4 bushels per acre, after a tour which took in Illinois, Indiana and Iowa, and parts of Minnesota, Nebraska and Ohio.

Allendale is undertaking a survey due for release in two weeks' time, while the ongoing ProFarmer tour, one of the most widely followed, is showing corn yield potential and soybean pod counts broadly ahead of last year, with many states looking on course for record highs.

The ProFarmer tour has "given a very high assessment of the yields that can be expected," Commerzbank said, adding that "many observers therefore expect the US Department of Agriculture to upwardly revise its yield estimates for the US corn and soybean crops again".

'More abandonment'

However, Macquarie cautioned over levels of crop abandonment in some states, such as Iowa and Minnesota, but also Nebraska where even though crop prospects are "excellent" the east of the state has been hit by "greater volumes of hail storms", besides high winds.

"There are likely to be higher-than-normal volumes of abandonment in the east," Mr Gadd said.

Furthermore, analysis of data on Friday from the Farm Service Agency, which collects data from insurance policies against lost crops, to those which could not be planted, indicates that the USDA may be too generous in its corn and soybean sowings estimates.

The data "in our view suggest the USDA's area has overestimated plantings in some states", Mr Gadd said.

Macquarie estimated corn area at 90.5m acres, 1.125m acres below the USDA figure, and soybean plantings at 84.4m acres, some 400,000 acres below the official guess.

The impact on the soybean balance sheet was to offset the impact of highest yield expectations, and in corn to curtail the US harvest at 14.017bn bushels, 15m bushels below the USDA forecast.

Data interpretations

Brokers have in fact revealed different interpretations of the FSA data which, in not including only farms eligible for insurance, do not cover the complete US sector.

Doane said too that the FSA report "suggests that corn planted acreage at 91.6m acres may be too high".

US Commodities said that the FSA suggest that the USDA corn sowings estimate is 1.5m acres too high, with the soybean number optimistic by 500,000 acres.

However, another broker said that the data were "incomplete" and "should be disregarded", while, at Futures International, said that "we don't see the number this year as a major market factor, unlike recent years such as the drought in 2012".

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