Despite some showers in July, dry conditions during the early stages of crop development in much of the U.S) Corn Belt in June have led to a reduction in the yield potential for the 2023/24 season. In turn, this has resulted in lower yield forecasts for corn and sorghum.
Lowered by 0.8 bushels per acre, the corn yield forecast for the 2023/24 season is now estimated at 173 bushels per acre, according to the United States Department of Agriculture (USDA). Similarly, the sorghum yield forecast for the same season has been revised downward from 60.9 bushels per acre to 57.4. Notably, these yield revisions mark a significant change from the initial estimates in June and July, representing the first downward revision since 2012.
Source: USDA, Tridge
These lower yields have had a direct impact on the production forecasts for both corn and sorghum in the 2023/24 season. According to the USDA National Agricultural Statistics Service (NASS) October Crop Production report, corn production for the 2023/24 season is now estimated at 15.06 billion bushels. This reflects a decrease of 69.5 million bushels compared to the previous month's estimate. Additionally, the forecast for sorghum production in 2023/24 has been lowered by 21.64 million bushels to 359.6 million. Adverse weather conditions have thus led to notable adjustments in crop projections for the upcoming season.
Source: USDA, Tridge
These revisions reflect the impact of unfavorable weather conditions and reduced yield expectations, emphasizing the challenges that agricultural markets face due to climatic variations and their repercussions on production. This adjustment in the sorghum and corn production forecast may influence supply and intended use for the 2023/24 season, resulting in possible adjustments in sourcing strategies for buyers.
The reduction in beginning stocks for the 2023/24 season, as reported in the September Grain Stocks report by NASS is a key factor. Beginning stocks for corn are now estimated at 1.36 billion bushels, a decrease of 90.3 million bushels. This diminishes the available corn supply for the season, bringing it down to 16.45 billion bushels.
With reduced corn supplies, the report anticipates an impact on total use. Feed and residual corn use is expected to decrease by 25 million bushels, alongside a reduction in exports due to weaker early season demand. The forecasts for feed use and exports now stand at 5.6 billion and 2.03 billion bushels, respectively.
As a result, buyers of corn and sorghum feed in countries such as Saudi Arabia and the broader Middle East may need to explore alternative suppliers, as corn feed export volumes from the US are expected to decline. Brazil could be a suitable alternative, given the rising corn production figures in the country. In fact, Brazil overtook the US as the world's leading corn exporter in 2023, accounting for 32% of the global market compared to the US’ 23%, according to the USDA.
Additionally, tighter supplies are anticipated to drive an increase in the average price received by US corn farmers for the 2023/24 season, with a new estimate of USD 4.95/bushel, up from the previous estimate of USD 4.90. These developments highlight the dynamic nature of global agricultural markets and the importance of diversifying sourcing strategies for key commodities like corn feed.
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