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After two disheartening reports from the USDA this summer, last week's September Crop Production and World Agricultural Supply and Demand (WASDE) report was mild in comparison, said DTN senior analyst Todd Hultman.

"Lately you get kind of conditioned to expect something bad to come out of the USDA reports. We've had two very tough ones so far this year. But as it turns out, the September report was pretty mild," Hultman said of the Sept. 12 report. 

Excessive spring rains and flooding across the Midwest delayed and prevented plantings, pushing crop yields down in 2019. Accordingly, the USDA lowered corn and soybean production and yield, dropping corn production to 13.799 billion bushels and soybean production to 3.633 billion bushels. 

In calculating average yield per acre, Hultman said this was the first time this year that USDA officials factored field surveys into the report.

Corn projections

"Corn yields have dropped to 168.2 bushels per acre (bpa), down slightly from last month's estimate of 169.5 bpa," Hultman said. "There was also a slight decrease in ethanol demand of 25 million bushels, which is probably not a big surprise as it's been a much tougher market this year with the profit margins pinched and some plants having to sit idle."

Wisconsin is expected to see a 5.2% decrease in corn yield compared to 2018. 

Shelby Swain Myers, Associate Policy Advisor for the Indiana Farm Bureau Federation noted that across the U.S., corn yields were the highest in Iowa at 191 bpa, followed by Nebraska at 186 bpa. 

Wisconsin was below the national average at 163 bpa with Michigan trailing at 148 bpa.

Hultman pointed out that corn export markets have not performed well due to above average crops and cheaper corn from Brazil.

"We got priced out of the market," Hultman said. "We didn't meet our export estimate objective for the old crop season and were left with increased ending stocks estimates of 2.4 billion bushels. So that's a bit discouraging." 

Hultman says he doesn't expect a bearish report from the USDA next month. 

"The problem that we suspect will emerge with this year's crop will be that portion of the crop that was planted mid-June and later. We'll hear crop reports anecdotally, perhaps maybe in November," he said. "But I don't expect the damage of that (late planted crop) to show up until the January WASDE report. So, we haven't heard the last from corn."

Soybeans get a lift

The monthly USDA report that this year’s soybean crop will be slightly smaller, and demand will be higher, has created a much tighter supply situation, both domestically and globally.

Soybean production is projected at 3.6 billion bushels, down 47 million on a lower yield forecast of 47.9 bushels per acre—a 900 million bushel reduction from a year ago. Hultman said the tighter supply is due to fewer planted acres.

"This is the lowest soybean planting that we've seen in 14 years," he said.

Soybean yield was also down from last month, with the USDA projecting a yield of 47.9 bpa, a decrease of about a half bushel over August.

"I expected about 47 bpa, and I wouldn't have been shocked to see 46 bpa," Hultman said, adding that in his mind, that estimate is a bit high. "Everywhere I go and talk to farmers, they are saying the same thing: the pods just aren't there. So it makes me wonder if we're going to see a lower yield estimate on soybeans before we're done."

Wisconsin is expected to see a drop of 4.1% in soybean yield compared to last year's crop, with 47 bpa forecast for this year's harvest.

Soybean supplies were reduced 2% on lower production and beginning stocks. Soybean crush and exports remained unchanged, with ending stocks projected at 640 million bushels, down 115 million from August.

"We continue to see a decent crush demand. Thank goodness we've been able to count on it," Hultman said.

That brings a little good news to soybean growers with a forecasted U.S. season-average soybean price at $8.50 per bushel, up 10 cents. Soybean meal price is projected at $305 per short ton, up $5, according to the report.

Soybean prices got a lift last week on renewed hopes for a trade deal with China and tighter supply outlooks from the USDA. According to Reuters, private Chinese companies contracted about around 600,000 tons of soybeans earlier this month. The USDA projected higher soybean exports of 45 million bushels. 

News that China will lift punitive tariffs imposed on U.S. soybeans ahead of trade negotiations next month rallied the market, and raised producer hopes a bit.

"For soybeans, the obvious wildcard is China and African Swine Fever. When (if) China returns to the U.S. market, just how big of a buyer will they be?" Myers said. "While they once purchased one-third of every soybean acre in the U.S., that is no longer certain given increased production in South America and a smaller hog population."

Wheat takes hard fall

The USDA noted that prices for most classes of U.S. wheat took a dive, with Hard Red Winter wheat plunging to $16/ton to $196. 

"While wheat exports are up 27% from a year ago, there's a lot of competition ahead, especially from the European Union, the Ukraine and Russia, three countries that are having a very big crop year," Hultman said. "Unfortunately world ending wheat stocks are on track for a record high."

Dairy projections

The report was a bit more optimistic for dairy producers, with the all milk price forecasted to climb to $18.35 per cwt., with the trend continuing into 2020. USDA officials targeted the price to rise as high as $18.85 per cwt. 

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