The U.S. Department of Agriculture (USDA) announced on Friday that U.S. farmers produced less corn and soybeans last year than previously anticipated, leading to an increase in crop prices. The agency’s downward revision of output estimates was prompted by a dry end to the growing season.
Key Highlights:
Corn and Soybean Production:
The USDA revised the 2024 corn harvest estimate to 14.867 billion bushels, down from 15.143 billion in December. Analysts had expected a figure of 15.095 billion.
For soybean production, the USDA pegged the 2024 estimate at 4.366 billion bushels, compared to 4.461 billion in December and analysts’ expectations of 4.453 billion.
Market Impact:
Following the announcement, corn futures at the Chicago Board of Trade surged to their highest level since May, driven by projections of a decade-low global supply of corn.
The tighter supply situation is attributed to reduced U.S. output and strong demand from importers and livestock producers, particularly after corn prices fell to 2020 lows last summer.
Storage Levels:
U.S. farmers and grain companies are expected to hold the smallest amount of corn in storage in two years before the next harvest arrives late in the year.
As of December 1, there were 12.074 billion bushels of corn in storage, down from 12.171 billion a year earlier. Soybean storage was reported at 3.100 billion bushels, up from 3.001 billion the previous year.
Future Projections:
The USDA projected 2024-25 U.S. corn ending stocks at 1.54 billion bushels, a decrease from the December forecast of 1.738 billion. For soybeans, ending stocks were estimated at 380 million bushels, down from 470 million in December.
Expert Insights:
Terry Reilly, a senior agricultural strategist with Marex, noted, “We obviously did see some deterioration in yields,” suggesting that this report could shift market expectations away from a bear market.