TFM Perspective 3-3-2023


USDA Outlook Forum Corn Yield and Carryout Numbers

The numbers the USDA provided at the February 24 – 25 Outlook Forum for the upcoming corn crop paint an interesting picture of what could be in store for this year’s production and, ultimately, projected carryout. Numbers will change over time, as new projections and conditions warrant. For now, the market has some expectations. We will break down acreage, yield, production, and projected carryout.

The USDA is anticipating 91 million acres of planted corn compared to 2022, or an increase of 2.4 million acres. Harvested acres is projected to increase from 79.2 to 83.1 million. Keep in mind that the larger increase is due to a 1.6 million acres downward projection for the 2022 crop on the January World Agriculture Supply and Demand Expectations (WASDE) report. The reduction in harvested acres in 2022 was due primarily to drought conditions in the western Corn Belt. Production is expected to rise to 15.085 billion bushels, an increase of 1.355 billion bushels. Yield is expected to increase from 173.3 bushels per acre to 181.5. The bottom line is more acres, more production, and consequently, higher carryout, which is now estimated at 1.887 billion bushels, up from 1.267.

The average farm price is expected to decline from $6.70 to $5.60. The question the market needs to ask itself is in the numbers – are they accurate, or just a starting point? Bearish traders will argue weather conditions the previous several years have challenged the crop, and a yield of 181.5 is achievable. They may have a point, and only time will tell. Bullish traders will suggest yield (domestic and worldwide) has peaked, suggesting 181.5 is not likely. Additionally, they might suggest it will be difficult for corn-producing regions across the globe to all have record yields, implying global supplies could stay tight. The wild card is likely acreage. Will farmers plant more acres? If drought conditions lessen (drought monitor map is shrinking), it could mean the answer is probably yes.

For now, the numbers indicate more supply. It will take changes on subsequent supply and demand reports to suggest otherwise. Prices are historically high. Given the concerns that the world economy could be headed toward recession, a more proactive defensive marketing approach may be warranted.  The Forum figures suggest confidence in production. This reflects that betting against farmers to do all they can to produce a good crop may not be a good bet. To bet against normal-type weather may not be a good bet, either.

Visit with a professional about ways to capture favorable prices, using tools that best suit your operation and your goals. Understand opportunities and risks before entering into any position.

If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.


Bryan Doherty

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