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USDA Shifts Bean Acres to Corn

July 12, 2022

The United States needs big crops to prevent prices from spiking and to help meet world demand, and so far, it looks like estimates for this year’s corn crop could continue to swell into harvest. In World Agricultural Supply and Demand Estimates (WASDE) released today, USDA raised its estimate for the 2022-23 corn crop by 45 million bushels to 14.505 billion based on an increase of 400,000 acres from June’s WASDE report. The department left its yield estimate unchanged at 177 bu. per acre, raising endings stocks 70 million bushels to 1.47 billion. USDA cut its estimate for soybean production by 135 million bushels to 4.505 billion as bean acreage shifted to corn, and left the soybean yield forecast unchanged at 51.5 bu. per acre. The changes slashed ending stocks by 18% or 50 million bushels to 230 million.

However, the 2022 crops still face challenges. A dry weather pattern and spotty drought conditions have crept into the Corn Belt just as the nation’s corn pollinates.

According to USDA’s latest Crop Progress report, 15% of the nation’s corn crop was silking as of July 7, well behind the five- year average of 25%. And according to

last week’s Drought Monitor, about 39% of Indiana was in drought, up from 10% last week, and 20% of Missouri was battling drought conditions, compared to less than 9% last week. Even so, this year’s crops are well on their way. As of Sunday, 64% of the nation’s corn and 62% of its soybeans were in good to excellent condition, close to last

year’s 65% and 59%, respectively.

With the world bracing for recession, hedge fund managers have been offloading grain and commodity positions, which has been weighing on prices. The anticipation of large U.S. crops has also been pressuring prices lower. Corn and soybean prices sank in the wake of today’s report. However, weather problems, tight global stocks, fear of growing global food shortages exacerbated by war in Ukraine—USDA slashed Ukrainian corn production nearly 41%—will continue to support prices.

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