Agriculture officials released the first crop report since September – the scheduled report for October was lost in the government shutdown – and it showed corn production up by one percent and soybeans up three percent.
The report forecast corn production at 14 billion bushels, which was up from the previous forecast by one percent. That harvest is up 20 percent from the drought-stricken total of 2012.
If the crop production forecast is realized, this will be a new record corn production year. The previous corn production record was set in 2009.
Based on Nov. 1 conditions, officials expect U.S. yields to average 160.4 bushels per acre, up 5.1 bushels from the earlier forecast and 37 bushels over last year's average. If realized, this would be the highest average yield since 2009.
Farmers expected to harvest corn for grain from 87.2 million acres, which is down 2 percent from the previous forecast and down slightly from 2012.
Soybean production was forecast at 3.26 billion bushels, up three percent from the previous forecast and up seven percent from last year. If realized, production would be the third largest on record.
The U.S. Department of Agriculture's National Agricultural Statistics Service reported that expected soybean yields would average 43 bushels per acre over the country. That total would be up 1.8 bushels from the previous forecast and up 3.2 bushels from 2012.
The area for harvest of beans was forecast at 75.7 million acres, down one percent from the previous forecast and also from last year.
In conjunction with the crop report, the USDA also released the November World Agricultural Supply and Demand Estimates (WASDE) report. Based on crop production estimates as well as domestic and world demand, that report notes the 3.2 billion bushel increase over 2012 and predicts ending stocks of 1.887 billion bushels.
That amounts to an increase in stocks of about 130 percent from 2012-13.
In many regions of the country this year corn planting was delayed or hampered by an excessively wet May and June but later-planted crops were able to mature in many cases.
"The seasonable fall weather across much of the nation helped late-planted crops develop and increased yield projections from the September report," said Todd Davis, an economist with the American Farm Bureau Federation.
The ending stocks ratio for corn is projected at 14.6 percent, which would be the largest stock-to-use ratio since 2005. The ratio compares uses of corn like ethanol, feed and exports to the total corn harvested along with existing stockpiles of grain.
"This increase in stocks will likely cause prices to decline from a marketing-average price of $6.89 per bushel for 2012-13 to a projected $4.50 per bushel for 2013-14," said Davis.
With soybean ending stocks for 2013-14 projected to be up 21 percent to 170 million bushels it will put downward pressure on prices. The projected marketing-year average price for soybeans is $12.15 per bushel, down from last year's price of $14.40 per bushel.
Davis said this November report (released Nov. 8) provided a much-needed update to the size of the 2013 crop, giving farmers and the market an updated projection on harvested acres and yields. There was still some uncertainty on the effect of the wet spring on acres planted.
The favorable fall weather in most areas of the Corn Belt allowed crops to make up for their late planting dates and add to the harvest now going into bins.
The WASDE report found that globally and domestically, corn stocks are expected to build to levels not seen in several years. Soybeans stocks are expected to increase to the largest in three years.
The report lowered the expectation of a Brazilian crop from 72-79 million metric tons and also put exports higher – from 1.225 billion-1.4 billion bushels.
Use of corn for ethanol is expected to remain unchanged. But some in the market are beginning to predict a lower-price cycle for corn as well as wheat and soybeans.
Without a major weather problem like the one farmers experienced last year, they believe corn could trend steadily downward in this new cycle, with beans following in a year or two.
In the soybean arena, the WASDE report raised export numbers – from 1.37-1.45 billion bushels. Soybean crushers were expected to take from 1.655-1.685. When all the calculations were made the report estimated ending stocks of 170 million bushels.
The price rally of the last few years was brought on by demand from ethanol plants coupled with seriously bad weather in the major corn-producing states, which reduced harvests and drove prices up.
Market experts noted this week that there is potential in the federal government to reduce ethanol-use mandates, which would likely contribute to further cuts in ethanol production and lead to a downward trend in corn prices.
The WASDE report is based on information from the World Agricultural Outlook Board, which serves as the USDA's source for economic information and the commodity outlook for U.S. and world agriculture.
That board coordinates, reviews and approves the monthly WASDE report.