Update: Catch a replay of Farm Futures' Bryce Knorr discussing the latest survey results in a University of Arkansas webinar.
"Rain makes grain" may be the adage. But precipitation was too much of a good thing this summer, reducing corn and soybean production below early projections, according to results of the Farm Futures August Production Survey.
While weather reduced yields a little below average, most of the cuts came from lower harvested acreage in fields flooded by above normal June and July rains. Farmers were also prevented from planting some of their land, especially acres devoted to soybeans.
The survey of some 1,300 growers put corn production at 13.366 billion bushels, down 6% from last year's record and 1.2% below USDA's current estimate of 13.53 billion. The government used acreage reported June 30 and its statistical "trend" or normal yield to prepare its projection.
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Farm Futures found growers will harvest fewer acres, about 730,000 less than USDA. Their expected yields were also lower than USDA's, down a half a bushel per acre at 166.3 bpa.
The survey pegged soybean production at 3.768 billion bushels, down 5.1% from last year and 3% lower than USDA's current forecast. Farm Futures found an average nationwide yield of 45.7 bpa, only .3 lower than USDA's statistical trend. But harvested acreage could be 2 million below USDA's June 30 estimate.
"Our survey suggests ending stocks of both crops could be less than the government currently forecasts," said Bryce Knorr, Farm Futures Senior Market Analyst, who conducted the research. "But that doesn't necessarily mean prices must rally. Turbulent outside markets and widespread bearishness in commodities globally could dampen normally bullish enthusiasm.. That could make it harder to convince end users and speculators to buy, unless weather problems cut production elsewhere around the world."
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Already hot, dry weather has hurt corn yields in France, Knorr noted, while fields in Ukraine also are turning drier.
"Soybeans will depend on production in South America, where growers are wrestling with deflating currencies. Brazil is still shipping its huge 2014 crop, which has U.S. new crop sales at a five-year low. If Chinese demand for U.S. beans doesn't recover this fall, a smaller crop may not make much difference to prices."
Knorr will discuss results of the Farm Futures August production survey and its implications for prices Aug. 5 in the next University of Arkansas Food and Agribusiness webinar.