The ‘number’ is just about all grain traders have been talking about for the last couple of weeks. Now they have it.
The number is the U.S. Agriculture Department’s latest estimate of how big the nation’s corn, soybean and other crops will be. For corn the number is 13.2 billion bushels, for soybeans 3.48 billion bushels.
Taken by themselves the numbers don’t mean much. They take on importance, though, in the expectations game. The corn number is down slightly from last month, so that means less supply and higher prices for the grain. For soybeans the opposite will probably happen, the soybean outlook is improving so that tends to drive prices down.
Minnesota plays a big role in all of this.
It’s the fourth largest corn producing state, behind Iowa, Illinois and Nebraska. It’s the third largest soybean state, trailing Iowa and Illinois. The U.S. Agriculture Department estimates the Minnesota corn crop at 1.239 billion bushels.
If that’s true, it will be just a little short of last year’s record, 1.244 billion bushels.
The Minnesota soybean crop is estimated at 341 million bushels, topping the old record set in 2006 of 319 million bushels. Even though the corn estimate slipped a little, state farmers are still looking good.
Corn prices have risen to nearly four dollars a bushel at the local elevator and that is a profitable level. Soybeans are around ten dollars a bushel, still profitable, but it looks like they will slip a little as traders digest today’s crop size.
For corn prices, strong foreign and domestic demand are driving things higher. The Russian drought means that country might buy more U.S. grain.
China announced a couple of months ago that it too expects to buy more foreign corn in the years ahead. Domestically, the ethanol industry has been using more and more corn — roughly a third now of the U.S. corn harvest.
The industry could get another boost this fall, if the EPA goes along with requests to boost the allowable level of ethanol in gasoline.
Currently it’s 10 percent, the ethanol industry wants that ramped up to 15 percent. If the EPA approves the hike, it likely means more ethanol will be made and that means more demand for corn.
One of the most interesting things about the latest numbers are the yields. Minnesota corn farmers are expecting to average 177 bushels per acre. That would be record. The old standard of 174 was set last year and in 2005.
Ten years ago farmers averaged 145. Twenty years ago it was about 120 bushels an acre.
Going even further back, let’s say 50 years to 1960, the average corn yield was around 60 bushels an acre. And in the 1930’s it was about 25 bushels an acre.