The prolonged drought in the upper Midwest is dragging down crop yields by more than the government or traders expected, although U.S. farmers should produce 4% more corn and 5% more soybeans this year than they did in 2020, according to the Agriculture Department's first survey-based estimates of the fall harvest.
Record corn yields in eight states, including Illinois, Indiana and Ohio, as well as relatively strong production in Iowa will be somewhat offset by sharp declines in yields in Minnesota and the Dakotas, according to the Crop Production report released Thursday.
USDA's projected average corn yield of 174.6 bushels per acre is lower than the average trade estimate of 177.6 bushels and also below USDA's July forecast of 179.5 bushels per acre. In Thursday’s World Agriculture Supply and Demand Estimates, USDA lowered its projection of ending stocks for the 2021-22 marketing year by 190 million bushels to 1.2 billion bushels.
The average soybean yield was estimated at 50 bushels an acre, down from the July forecast of 50.8 bushels.
Corn futures in Chicago jumped about 5% in the first hour of trading after the reports were released.
University of Illinois economist Scott Irwin tweeted that the sharp hits to yields in the upper Midwest were why "the market missed on the USDA estimate by so much.”
Allendale broker Mike Lung said USDA often raises yield estimates following the August report, and that may be the case this year, too.
USDA raised its estimate of the average farm-gate price for this year's corn crop by 15 cents to $5.75 per bushel. The forecast soybean price remained unchanged at $13.70 a bushel.
USDA estimates that farmers will harvest 14.8 billion bushels of corn this year, the second largest crop in history, and 4.4 billion bushels of soybeans.
The estimates were based on surveys of 18,600 farmers conducted between July 25 and Aug. 6.
The average corn yield in Minnesota, which Agriculture Secretary Tom Vilsack on Thursday, is expected to sink to 166 bushels an acre this fall, down from 192 bushels in 2020, with the state's total production slipping about 114 million bushels to 1.33 billion bushels. South Dakota is expected to increase production slightly to 738 million bushels but only because farmers are forecast to harvest nearly 5.6 million acres this year, an increase of more than 1 million acres from 2020.
Yields in Iowa, where a derecho hammered crops a year ago, are expected to rebound to 193 bushels per acre this fall, up from 178 bushels last year, pushing the state's nation-leading production to 2.44 billion bushels.
In Illinois, farmers are expected to harvest 2.35 billion bushels, an increase of nearly 223 million bushels from 2020, on an average yield of 214 bushels per acre. Last year's average was 192 bushels per acre.
USDA estimates that cotton farmers will produce 17.3 million bales this year, an 18% increase from 2020, even though average yields are projected down 47 pounds to 800 pounds an acre. Farmers are expected to harvest 10.4 million acres, a 25% increase from last year.
USDA raised its estimate of the average price for this year's cotton crop by five cents to 80 cents a pound, which would be the most growers have earned in a decade.
According to USDA, about 34% of the nation's corn acreage and 30% of the soybean acreage is experiencing drought-like conditions. About 66% of North Dakota’s corn acreage is designated in an extreme drought, followed by South Dakota at 26%, Minnesota at 23%, and Iowa at 8%.
According to USDA’s Weekly Crop Progress report, 64% of the nation’s corn crop is rated in good to excellent condition, compared to 62% a week ago. Soybean crop conditions held steady at 60% compared to a week ago.
Most producers across the central United States are expected to see cooler temperatures beginning Friday.
“It doesn’t look like any extreme heat on the way beyond this week,” USDA Meteorologist Brad Rippey told Agri-Pulse. “A lot of the heat will be focused across those really horrifically dry areas of the Northwest and northern Plains.”
For more news, go to Agri-Pulse.com.