The U.S. corn crop is set to exceed last year’s production, but it may not be enough to cut into rising corn prices before the end of the season. The U.S. Department of Agriculture (USDA) reduced its projected yields for the 2021 corn and soybean crops last week, prompting an uptick in market prices for both commodities. Although both crops are expected to exceed last year’s totals, growing drought cut into the rather rosy yields USDA forecasted last spring, reducing the USDA’s anticipated U.S. corn production by more than 10 million metric tons, and soybean production by 1.8 million metric tons. While private commodities analysts suspected the USDA’s previous yield estimates were too high, last week’s report cut the crop’s anticipated size far more than traders had anticipated.
The disparity between the cuts on the corn side v/s soybean production could also suggest USDA will make further cuts as summer turns to fall, according to Arlan Suderman, CCE for StoneX Group. Crop conditions also vary significantly from one location to the next, Langemeier said. The USDA reduced projected corn exports from the US by 2 million tons, citing the reduced crop size rather than reduced demand which remains relatively steady despite some uncertainties. Commodity prices initially spiked after the report released but seemed to have leveled out as of August. While there remains ample opportunity for the price of either commodity to come down by the end of the year, Thompson noted that the odds of a large decrease have fallen as the summer has progressed.