Production Down, Prices Up

It’s corn! A big lump with knobs. It has the juice.

But we’re talking soybeans and cotton, too.

Each month, USDA’s National Agricultural Statistics Service (NASS) provides the World Agricultural Supply and Demand Estimates (WASDE) report. Yesterday, they released September’s report, and some commodities are down compared to 2021, driven by decreased production and yield. The culprit? You guessed it—drought.

By the numbers:

Production:

• Corn production is down 8% from 2021, forecast at 13.9B bushels.
• Soybean production is down 1%, forecast at 4.38B bushels.
• Cotton production is down 21%, forecast at 13.8B 480-pound bales.

Planted acres:

• Area planted to corn – estimated at 88.6M acres, down 1% from the previous estimate.
• Area planted to soybeans – estimated at 87.5M acres, down 1%.
• Area plated to cotton – estimated at 13.8M acres, up 11%.

Yield from last month’s forecast:

• National yield for corn is forecast at 172.5 bushels per acre, down 2.9 bushels or 2% from last month.
• Soybean yield is forecast at 50.5 bushels per acre, down 1.4 bushels or 3% from last month.
• Cotton yield expected to average 843 pounds per harvested acre, down 3 pounds from last month’s forecast.

What this means for prices: Less corn means a projected near-record $6.65/bushel price. Soybeans are expected to get an average $14.35/bushel—just 5 cents less than the record.

Soundbite: “If you were 50% sold going into this and if you’ve got bin space, this report is telling us you would want to store that grain and expect basis to be pretty strong throughout into the spring,” says Bill Biedermann, co-founder of AgMarket.net. “The stocks-to-use ratios are still extremely tight on a historical basis. With these numbers, the odds are the crop will continue to get smaller.”

He even added there was a 70% chance we’d see more reductions after the USDA drops the national average yield in its September report.