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FOCUS ON AG

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    The “FOCUS ON AG” column is sent out weekly via e-mail to all interested parties. The column features timely information on farm management, marketing, farm programs, crop insurance, crop and livestock production, and other timely topics. Selected copies of the “FOCUS ON AG” column are also available on “The FARMER” magazine web site at: https://www.farmprogress.com/focus-ag
    For more information on items in the “FOCUS ON AG” column, feel free to contact me. Thanks and have a great day ! Kent Thiesse

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2022  CROP  INSURANCE  PAYMENT  POTENTIAL

10/26/2022

 
Crop producers in Nebraska, South Dakota, Western Iowa, portions of Minnesota, and other States that were impacted by lack of rainfall and varying degrees of drought conditions during the 2022 growing season may have final corn and soybean yields that are well below their APH crop yields. Other areas of the Upper Midwest may have also been impacted by severe storms that caused some yield reductions. Farmers in any of these areas could potentially realize some 2022 crop insurance indemnity payments, due to the reduced yields this year. A yield reduction well below APH yields will be necessary in order to receive any 2022 crop insurance payment for corn, due to the final corn harvest price likely to be higher than the Spring base price. This situation for soybeans will be somewhat different the harvest price will be below the Spring base price.
 
The Federal crop insurance harvest prices for corn and soybeans are based on the average Chicago Board of Trade (CBOT) price for December corn futures and November soybean futures, during the month of October, with the harvest prices being finalized by the USDA Risk Management Agency (RMA) on November 1. The Spring base prices for corn and soybeans are based on the average CBOT prices for December corn futures and November soybean futures during the month of February. The final harvest prices will be used to calculate the value of the 2022 harvested crops for all revenue protection (RP) crop insurance policies, as well as to potentially determine the revenue guarantee for the RP policies that include harvest price protection if the harvest price is higher than the base price; otherwise, the base price will be used to determine revenue guarantees for RP policies.
 
The harvest price for corn will be higher than the base price for corn RP policies in 2022, so the harvest price will be used for crop insurance guarantee calculations on RP policies this year. The Spring base price for corn will use for 2022 guarantee calculations for all yield protection policies (YP) and revenue protection with harvest price protection (RPE). The situation will be different for soybeans, with the harvest price being lower than the base price and the base price being used for all RP calculations in 2022. Farm operators with final corn yields that are within 15 percent of their 2022 crop insurance actual production history (APH) crop yields will likely not receive any crop insurance indemnity payments; however, that situation will be different for soybeans.  
 
The estimated 2022 harvest prices as of 10-24-22 were $6.79 per bushel for corn, compared to a base (Spring) price of $5.90 per bushel, and $13.79 per bushel for soybeans, compared to a base price of $14.33 per bushel. The base price will be used to calculate and crop insurance indemnity payments on farms insured by yield only YP policies and on RPE policies for both corn and soybeans, as well as on RP policies for soybeans in 2022. The harvest price will be used to determine the revenue guarantee for all corn RP policies, but not on RPE policies that include the harvest price exclusion. The harvest price will also be used to calculate the final revenue amount for all RP and RPE policies for both corn and soybeans.
 
Optional Units versus Enterprise Units
Farm operators in areas with variable yield losses on different farm units that chose “optional units” for their 2022 crop insurance coverage rather than “enterprise units” may be in a more favorable position to collect potential indemnity payments on this year’s crop losses. “Enterprise units” combine all acres of a crop in a given county into one crop insurance unit, as compared to “optional units”, which allow producers to insure crops separately in each township section. In recent years, a high percentage of crop producers have opted for “enterprise units”, due to substantially lower crop insurance premium levels. Crop losses in many areas in 2022 were highly variable from farm-to-farm within the same county and township, which would favor the “optional units” for collecting crop insurance indemnity payments this year.
 
RP Crop Insurance Calculations for Corn and Soybeans in 2022
The 2022 crop insurance calculations for RP insurance policies with harvest price protection will likely function differently for corn and soybeans. Here are the details for 2022 RP calculations:
  • Corn
Since the harvest price for corn will be above the Spring base price, the harvest price will be used for both the final revenue guarantee and the final crop value calculations. As a result, any potential crop insurance indemnity payments will require a yield loss comparable to the policy coverage level. For example, an 85% RP policy will require a harvest yield that is greater than 15% below the APH yield, an 80% RP policy will require a 20% or greater yield loss, etc. For RP policies, any corn indemnity payments will be based on the higher corn harvest price, as compared to the base price for YP or RPE polices. At current corn harvest price projections, there could be a significant difference in potential indemnity payments with RP insurance policies in 2022, as compared to YP or RPE policies.
 
  • Soybeans
Since the 2022 harvest price soybeans will be lower than the base price, the revenue guarantee for RP and RPE policies will be determined by the base price and the harvest value of the crop will be determined by the harvest price. Due to the lower harvest price, the “threshold yield” to initiate crop insurance payments will be at a higher percentage than the RP insurance coverage level and higher than standard YP insurance policies. Using a final harvest price of $13.80 per bushel and the 2022 soybean base price of $14.33 per bushel, the “threshold yield” to receive a soybean insurance payment is about at 88 percent of APH yield with an 85% RP policy, 83 percent with an 80% RP policy, and 78 percent with a 75% RP policy. For example, with a 60 bushel per acre APH yield and a $13.80 per bushel harvest price, soybean insurance payments would begin if the final soybean yield fell below 53 bushels per acre with an 85% RP policy, below 50 bushels per acre with an 80% RP policy, and below 47 bushels per acre with a 75% RP policy.
 
The Type of Insurance Coverage will affect Potential Corn Indemnity Payments
The level of crop insurance coverage and having RP insurance policies, with harvest price protection, can be a big factor in determining the amount of insurance indemnity payment that is received for crop yield reductions. Most corn and soybean producers in the Upper Midwest are carrying 75%, 80%, or 85% RP insurance coverage in 2022; however, there are some producers that utilized YP (yield only) or RPE (harvest price exclusion) policies in order to reduce crop insurance premiums. There could be a big difference in the potential final results of the various insurance policies for corn in 2022, due to the type of insurance policy, the level of insurance coverage, and the impact of the harvest price. To receive a copy of an information sheet and calculation worksheet titled: “2022 Crop Insurance Payment Potential”, send an e-mail to: [email protected]
 
2022 Corn and Soybean Crop Insurance Summary
There will be considerable variation in potential crop insurance indemnity payments across the Midwest in 2022, even within the same county or township. Some producers also carried enhanced private insurance coverage levels (90% or 95%), had separate wind or hail insurance endorsements, or carried additional area insurance coverage (SCO or ECO), any of which could affect final potential insurance indemnity payments on the 2022 corn and soybean crop. Producers that had crop yield losses in 2022, with the potential for crop insurance indemnity payments, should contact their insurance agent and properly document yield losses.
 
A reputable crop insurance agent is the best source of information to make estimates for potential 2022 crop insurance indemnity payments or to find out about documentation requirements for crop insurance losses, as well as to evaluate future crop insurance options. Details on various crop insurance policies can be found on the USDA Risk Management Agency (RMA) website at: https://www.rma.usda.gov/.
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USDA  DECREASES  CORN  ENDING  STOCKS

10/19/2022

 

​The monthly USDA World Supply and Demand Estimates (WASDE) Report that was released on October 12 will likely impact corn and soybean markets in the coming months. The WASDE Report decreased the expected U.S. corn ending stocks by the end of the 2022-23 marketing year, as compared to the September estimate. The projected soybean ending stocks for 2022-23 in the latest WASDE report remained the same as a month earlier.
 
The latest WASDE report showed a decrease in total demand levels for corn in the coming year, as compared to 2021-22 levels. Total demand for corn usage in 2022-23 was estimated at 14.15 billion bushels, which down by 125 million bushels from the September estimate and compares to total corn usage of nearly 15 billion bushels in 2021-22. The reduced corn usage estimates are mainly due to a projected decrease in corn export levels and corn used for livestock feed in the coming year. The total 2022-23 soybean usage is estimated at 4.4 billion bushels, which is down slightly as compared to a year earlier, mainly due to a slight decrease in expected export levels.
 
The October WASDE Report decreased the estimated U.S. corn ending stocks for the 2022-23 marketing year, as compared to the September report. The 2022-23 corn ending stocks are now estimated at 1.17 billion bushels which compares to previous year-end corn carryout levels of 1.38 billion bushels in 2021-22, 1.23 billion bushels in 2020-21, 1.99 billion bushels in 2019-20, and 2.22 billion bushels in 2018-19. The 2022-23 U.S. corn ending stocks-to-use ratio is now estimated at only 8.1 percent, which is very tight and compares to ratios of 9.2 percent in 2021-22, 8.3 percent for 2020-21, 14.4 percent in 2019-20, and 15.5 percent for 2018-19. The continued tight stocks-to-use ratio should help support the narrow basis levels at many locations in the Midwest and keep the potential for short-term rallies in the cash corn market in the coming months.
 
The 2022-23 U.S. soybean ending stocks in the WASDE Report were estimated at 200 million bushels, which is the same as the September USDA report. The projected 2022-23 carryover level is lower than the estimated final ending stocks of 274 million bushels in 2021-22 and 257 million bushels in 2020-21. The 2022-23 soybean ending stocks would still be considerably below some other recent carryover levels of 523 million bushels in 2019-20, 909 million bushels in 2018-19, and 438 million bushels for 2017-18. The U.S. soybean ending stocks-to-use ratio for 2022-23 is estimated at only 4.4 percent which is a very tight level. This compares to 6.1 percent for 2021-22 and 5.7 percent for 2020-21; however, the 2022-23 ratio would be well below the ratios 13.2 percent ratio for 2019-20 and nearly 23 percent for 2018-19. The expected tight degree of projected soybean ending stocks for 2022-23 will likely help support short-term soybean prices in the coming months; however, continued market strength may depend on 2023 South American soybean production and continued solid export markets.
 
USDA is estimating the U.S farm-level cash corn price for 2022-2023 at an average of $6.80 per bushel, which was up $.05 per bushel from the September estimate. The 2022-23 USDA price estimate is the expected average farm-level price for the 2022 crop from September 1, 2022 through August 31, 2023; however, this does not represent estimated prices for either the 2022 or 2023 calendar year. The projected 2022-23 average corn price compares to final market-year average corn prices of $6.00 for 2021-22, $4.53 per bushel for 2020-21, $3.56 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel for both 2017-18 and 2016-17.
 
USDA is projecting the U.S. average farm-level soybean price for the 2022-2023 marketing year at $14.00 per bushel, which was a decrease of $.35 per bushel from the September estimate.  The 2022-23 soybean price estimate would still be the highest in several years and compares to final market-year average prices of $13.30 per bushel for 2021-22, $10.80 per bushel for 2020-21, $8.57 per bushel for 2019-20, $8.48 per bushel in 2018-19, and $9.35 per bushel in 2017-18.  
 
USDA Lowers 2022 Corn and Soybean Yield Estimates
The monthly USDA Crop Production Report was also released on October 12. USDA reduced the expected 2022 national average corn yield by six-tenths of a bushel and decreased the projected 2022 U.S. average soybean yield by seven-tenths of a bushel per acre as compared to the September report. The latest estimated 2022 national corn yield is 5.1 bushels per acre lower than the final 2021 average yield, while the projected U.S. average soybean yield for 2022 is 1.6 bushels per acre below the final 2021 national soybean yield.
 
USDA is estimating the 2022 national average corn yield at 171.9 bushels per acre, which is well below the record U.S. average corn yield of 176.7 bushels per acre that was set in 2021. The projected 2022 U.S. corn yield also compares to 171.4 bushels per acre in 2020, 168 bushels per acre in 2019, and 176.4 bushels per acre in 2018. The estimated 2021 U.S. harvested corn acreage is 80.8 million acres, which is well below the 85.3 million acres that were harvested last year. The latest USDA Report estimated the total U.S. corn production for 2022 at just under 13.9 billion bushels, which is about 7 percent below the production level of 15.1 billion bushels in 2021. The anticipated 2022 corn production compares to levels of 14.1 billion bushels in 2020, 13.6 billion bushels in 2019, 14.4 billion bushels in 2018, and the record U.S. production of 15.15 billion bushels in 2016.
 
USDA is estimating 2022 U.S. soybean yield at 49.8 bushels per acre, which compares to 51.7 bushels per acre in 2021, 51 bushels per acre in 2020, 47.4 bushels per acre in 2019, 50.6 bushels per acre in 2018, and the record U.S. soybean yield of 52.0 bushels per acre in 2016. The harvested soybean acreage for 2022 is estimated at 86.6 million acres, which is up from 86.3 million acres in 2021 is well above 82.6 million acres in 2020; however, it is still below the 87.6 million harvested acres in 2018. The USDA Report estimated 2022 U.S. soybean production at 4.31 billion bushels, which trails the production level of 4.46 billion bushels in 2021 but is above the production levels of 4.22 billion bushels in 2020 and 3.55 billion bushels in 2019.   
 
The October USDA Report increased the expected 2022 corn yield in some States and lowered yield expectations in other States, compared to the September Report. Minnesota is projected to have a 2022 corn yield of 190 bushels, which compares to 177 bushels per acre in 2021, 191 bushels per acre in 2020, 173 bushels per acre in 2019 and the current State record yield of 194 bushels per acre in 2017. USDA is estimating the 2022 Iowa corn yield at 200 bushels per acre, which compares to the state record yield of 204 bushels per acre in 2021, 177 bushels per acre in 2020, and 198 bushels per acre in 2019. Illinois is expected to have record average corn yield at 210 bushels per acre in 2022, which compares to 2021 average corn yields of 202 bushels per acre. Other projected 2022 average corn yields are Indiana at 187 bushels per acre, compared to 195 bushels per acre in 2021, North Dakota at 141 bushels per acre, compared to 105 bushels per acre in 2021, and Wisconsin at 182 bushels per acre, compared to 180 bushels per acre in 2021. The drought-stricken States of Nebraska and South Dakota are projected to have average 2022 yields of 172 and 130 bushels per acre respectively, which compare to 2021 corn yields of 194 bushels per acre in Nebraska and 134 bushels pe acre in South Dakota.
 
USDA is estimating the 2022 Minnesota soybean yield at 50 bushels per acre, which compares to 47 bushels per acre in 2021, 50 bushels per acre in 2020, 44 bushels per acre in 2019 and the record yield of 52.5 bushels per acre in 2016. Iowa is projected to have a 2022 soybean yield of 58 bushels per acre, compared to the record yield of 63 bushels per acre in 2021, 56 bushels per acre in 2020, and 55 bushels per acre in 2019. Other projected 2022 State soybean yields are Illinois at 64 bushels per acre, compared to a record yield of 65 bushels per acre in 2021, Indiana at 59 bushels per acre, compared to 60 bushels per acre in 2021, North Dakota at 35 bushels per acre, compared to 25.5 bushels per acre in 2021, Wisconsin at 54 bushels per acre, compared to 55 bushels per acre in 2021, and South Dakota at 40 bushels per acre, which is the same as the 2021 average yield. Nebraska, which has been hard-hit by drought, is projected at 49 bushels per acre, compared to 63 bushels per acre in 2021.

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THE  DECISION  TO  SELL  OR  STORE  GRAIN ?

10/12/2022

 

Many farm operators will tell you that grain marketing decisions are one the hardest part of farming. This is especially true during times of highly volatile markets such as have been occurring in the past couple of years. Farm operators are concerned with inflation and the rapidly rising input costs, wanting to make sure that they keep their working capital strong for the 2023 crop year. In addition, the current tight local “basis” level for grain comes into play when making a sales decision for the 2022 corn and soybean crop.
 
Both corn and soybean prices rose significantly throughout the current growing season and have remained quite strong into harvest. This has improved the overall profitability projections for most Upper Midwest grain producers for 2022. The continued strength in corn and soybean prices has been driven by a combination of grain stocks adjustments by USDA, lower than anticipated U.S. corn and soybean production in 2022, and reduced South American crop production, as well as very strong domestic and export demand for both commodities. Some analysts feel that USDA may make further downward adjustments in 2022 estimated corn and soybean production, based on the limited rainfall and drought conditions in portions of the Western Corn Belt.
 
Nearby December corn futures on the Chicago Board of Trade (CBOT), which affect local cash corn prices, closed at $6.83 per bushel on October 7, which is nearly a $1.00 per bushel higher than in mid-July. It is quite unusual for corn futures to rise significantly after July and stay strong into harvest season, unless there is anticipated reduced crop production due to a drought or some other cause. The “new crop” CBOT corn futures in 2022 started the year near $5.60 per bushel in mid-January, then rose to $7.00-$7.50 per bushel from April until mid-June, before dropping below $6.00 per bushel in July and then rebounding to current levels. CBOT December corn futures have traded above $6.50 per bushel for a majority of the time since late August.
 
CBOT “new crop” soybean prices have also remained quite strong in recent months, though not at the same level as corn prices. USDA has been a bit more optimistic about 2022 U.S. soybean yields and production than with corn, and USDA recently increased the level of 2021 carryover soybean stocks. Nearby CBOT November soybean futures closed at $13.67 per bushel on October 7, which has declined by over $1.00 per bushel since mid-September. November 2022 CBOT soybean futures started the year at just over $13.00 per bushel, before rising to over $15.00 per bushel most of the time from mid-April until mid-June. Soybean futures traded from $13.50 to $14.25 per bushel during most of July and August, before declining to current levels.
 
Local grain elevators, ethanol plants and processing plants generally set their bid prices based off the CBOT futures price for a corresponding month. The difference between the local cash price being offered in a given month and the closest CBOT futures price is known as “basis”. The basis levels for both cash corn and soybeans have remained at very strong levels throughout most of 2022. In fact, there has been a significant “positive basis” for corn in the past few months at many processing plants and local elevators in the Upper Midwest, meaning that the local cash price is higher than the CBOT price. This situation does not occur very frequently in the Western Corn Belt, especially heading into harvest season.
 
For example, basis levels for the 2021 corn that was still in storage and 2022 corn that was harvested early was at a positive level of $.20 to over $.50 per bushel above the CBOT futures price in late September at many locations in the Upper Midwest. Soybean basis levels at regional processing plants also remained very tight into late September, with some plants briefly offering positive basis levels. The current basis level in Southern Minnesota for the 2022 corn and soybean crop being harvested is about $.20-$.50 per bushel lower than CBOT prices at most local grain elevators and processing plants. However, the basis levels improve significantly for grain that is stored and sold after harvest in December or January.  
Generally speaking, when there is a positive or extremely tight basis level for cash corn and soybean, such as currently exists, farmers should look to take advantage of those opportunities to market some of the unpriced corn or soybeans that are being harvested. The nearby CBOT corn or soybean futures price could increase in the coming months but if the basis at the local grain elevator or processing plant widens at the same time, the cash price to the farmer may not change. While a $.50 per bushel widening of the basis may not sound that significant, that amount represents $50,000 on a grain bin with 100,000 bushels of unpriced corn. This could make up a considerable portion of the profit margin for the 2022 corn crop.
 
Many producers have utilized “hedge-to-arrive” grain marketing contracts in the past to lock-in a price on corn or soybeans prior to harvest, and then store the grain until the following Spring or Summer for improved local cash prices. A typical “hedge to arrive” contract locks in the futures price and allows the local price to be determined at a later date. The concept is that the basis level usually narrows during the first half of the year following harvest, as the grain supplies grow tighter. In most years, the basis level for local cash grain prices is usually quite wide at harvest time and then narrows in future months. This scenario did not occur with the 2021 corn and soybean crop and will likely not occur with the current 2022 crop. The current tighter basis levels at harvest mean that positive results from typical “hedge-to-arrive” grain marketing contracts might be very limited.
 
It is important for producers to remember that tight basis levels at local grain elevators and processing plants are mostly driven by local demand for corn and soybeans. Once that demand is met, basis levels tend to widen back to more typical levels. As we have seen in recent months, basis levels can vary considerably from day-to-day at local grain elevators, feed mills, and processing plants, depending on the immediate need for corn and soybeans. Paying attention to basis levels and understanding the factors that affect basis can play a big part in the success of a farm grain marketing plan.
 
Farm operators also need to factor in the cost of storing the grain when considering grain marketing decisions. The rapid rise in the short-term interest rates to 6-7 percent or more has become a factor in grain storage decisions, especially if farmers have an operating line of credit that they are currently paying accrued interest on. When all factors are considered, the cost of storing corn or soybeans for six months can range from $.25 to $.50 per bushel. The main reasons to capture reasons to store grain are usually to capture improved commodity prices or stronger basis levels in the Spring and Summer months, which will enhance local cash bids in the later months.
 
Currently, cash corn bids at grain elevators and ethanol plants in Southern Minnesota are near $6.50 to near $7.00 per bushel, which is nearly the same as the bids being offered in the Spring and Summer of 2023. Similarly, cash soybean bids at local elevators are currently near $13.00 to $13.50 per bushel, with higher prices at soybean processing plants, which again is similar to prices being offered in the first half of 2023. The current grain market scenario is currently not offering much incentive to store corn and soybeans into the Spring and Summer of 2023. Some farmers may choose to store and price grain for December or January delivery for tax management purposes and to capture a few extra cents per bushel.
 
Many farmers have had some difficulty making grain marketing decisions for the 2022 corn and soybean crops. Being able to “lock-in” local cash prices over $6.00 per bushel for corn and over $13.00 per bushel for soybeans is the best opportunity that has existed during harvest season in many years. On the other hand, farmers do not want to miss another grain price “run-up”, given the current tight U.S. grain supplies. It is important to remember that the catalyst for another commodity price increase next year might be continued or worsening U.S. drought conditions as we head into the 2023 growing season. If a major drought does not develop in 2023, corn and soybean prices are likely to follow a more typical seasonal price pattern next year. No two years are the same, but historical price trends are something to keep in mind in analyzing grain marketing strategies for the 2022 crop.

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MINNESOTA  BEEF  EXPO  SCHEDULED  FOR  OCTOBER  20-23

10/5/2022

 
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HARVEST  SEASON  UNDERWAY  IN  MANY  AREAS

10/5/2022

 
​The warm late growing season during September this year has pushed the 2022 corn and soybean crop very rapidly toward maturity. By the end of September, soybean harvest was 50 percent or more completed in many portions of Upper Midwest, while some areas still needed a bit more time for soybeans to fully mature. Many corn hybrids had also reached physiological maturity by late September and were also ready to be harvested; however, some producers are hoping for some significant field dry-down of the corn prior to harvest.
 
As of September 28, a total of 2,629 growing degree units (GDU’s) had been accumulated since May 1 at the University of Minnesota Southern Research and Outreach Center at Waseca, which is comparable to many areas of Southern Minnesota and Northern Iowa. This will be the final 2022 GDU count at Waseca, as that location received the first freezing temperatures of the year on September 28. The 2022 GDU accumulation at Waseca exceeded the normal GDU accumulation by 5 percent; however, the 2022 total trailed the 2021 GDU accumulation in late September by 121 GDU’s. The extra growing degree units, combined with dry weather in September, helped this year’s corn and soybean crop reach maturity, as well as to dry down rapidly in the field.
 
Most soybeans have now reached maturity and soybean harvest has been underway for the past couple of weeks in many locations across Southern Minnesota and Northern Iowa. As expected, soybean yields have been highly variable across the Upper Midwest due to differing impacts from rainfall amounts and timeliness of rainfall in many locations, as well as moderate to severe drought conditions in Nebraska, Kansas, and portions of Southern South Dakota and Western Iowa. Generally, the soybean yields have been average or above and much more consistent in South Central and Southeast Minnesota, Wisconsin, and the eastern half of Iowa, as well as in Illinois and Indiana. Soybean yields in other areas have been highly variable depending on the growing season rainfall. Soybean yields in areas impacted by drought have been well below the crop insurance APH (average) yields.
 
Most of the corn in the Upper Midwest has reached physiological maturity, which is the “black layer” stage, or is very close to reaching maturity. Corn is usually at 30-32 percent moisture when it reaches the “back layer” stage, and then begins to dry down naturally in the field. Ideally, growers like to see corn dried down in the field to at least 20-22 percent moisture, or lower, before they harvest the corn. This greatly saves on corn drying costs and improves the quality of the corn being harvested and going into storage. Corn is usually dried down to a final moisture content of 15-16 percent moisture for safe storage on the farm until the following Summer.
 
Corn will dry down about 0.50 % per day naturally at an average daily temperature of 60 degrees F, which increases considerably at higher temperature levels, such as have existed in recent weeks. At Waseca, the normal daily average air temperature in September is above 60 degrees, but that drops to only about 48 degrees during October. If favorable drying weather continues in the coming weeks, it is likely that corn drying costs in many areas will be greatly reduced in 2022. The moisture content on much of the corn being harvested in many areas has dropped considerably during the last half of September and is now 25 percent or lower.
 
It is a bit early to project 2022 corn yields across the Midwest; however, early indications are that corn yields in many areas will just as variable as the soybean yields. In portions of the upper Midwest that had timely and adequate rainfall during the growing season, 2022 corn yields may end up average or above average. However, in those areas that missed the timely rainfalls, corn yields will likely be reduced, with yields well below APH levels in the areas that were impacted by drought conditions in 2022. Based on the September 12 USDA Crop Report, favorable 2022 average corn yields (Bu/A.) were projected in Illinois (204), Iowa (200), Minnesota (190), Indiana (186), Wisconsin (183) and North Dakota (141). Less favorable corn yields were projected for Nebraska (176) and South Dakota (138), which are both well below recent state average yields.
 
USDA  GRAIN  STOCKS  REPORT  DECREASES  CORN  SUPPLY
The September 30 USDA Grain Stocks Report surprised most grain marketing analysts, being especially “bullish” for future corn markets and basically “bearish” for soybean markets. Grain stock estimates for corn were 8 percent lower than pre-report estimates by grain traders, while soybean stocks were somewhat higher than early estimates and wheat stocks came in close to the anticipated projections. Following the USDA report, December corn futures on the Chicago Board of Trade (CBOT) increased by 8 cents per bushel, while November soybean futures declined by 46 cents per bushel. Wheat futures were also stronger following the report, due to USDA adjusting the estimated 2022 U.S. wheat production downward by 133 million bushels from the August estimate.
 
The biggest surprise in the Grain Stocks Report on September 30 was the estimated total U.S. corn stocks at 1.377 billion bushels, which was 120 million bushels lower that the pre-report estimates; however, the 2022 corn stocks on September 1 are still 11 percent higher than the 1.235 billion bushels on 9-01-21. USDA estimated that 509 million bushels of corn was stored on farms as of 9-01-22, which is up 115 million bushels from a year ago; however, it represents only 36 percent of the total corn stocks. This probably helps to explain the very tight corn basis levels that has existed in recent weeks at local grain elevators and processing plants in many locations.
 
The latest report implies total corn usage for feed, ethanol, exports, etc., from July 1 to September 30 this year at 2.97 billion bushels, which is up slightly from a year ago. In addition, USDA adjusted the final 2021 U.S. corn production totals downward by 41.4 million bushels from previous estimates, based on reductions in the 2021 harvested acres and the final 2021 U.S. average corn yield. The CBOT December corn futures closing price on 9-30-22 was $6.77 per bushel, compared to September 30 CBOT corn prices of $5.37 in 2021, $3.79 in 2020, $3.88 in 2019, $3.56 in 2018, and $3.55 in 2017.
 
The USDA soybean stocks estimate of 274 million bushels as of September 1 was just over 10 percent above the average grain trade estimate of 247 million bushels and equaled the highest estimates of marketing analysts. The soybean stocks estimate on 9-01-22 is only 17 million bushels above the U.S. soybean inventory of 257 million bushels a year ago on September 1. Soybean stocks remain at very tight levels compared to recent years prior to 2021. It was estimated that only 63 million bushels of soybeans were stored on farms as of 9-01-22, which represented approximately 22 percent of the total stocks. This again, helps explain the continued strong basis level for cash soybean prices at many grain elevators and processing plants.
 
The biggest reason for the higher soybean stocks in the latest USDA report was an increase in the final 2021 U.S. soybean production of 30 million bushels, based on additional harvested acres in 2021 and a slightly higher final U.S. average soybean yield last year. Soybean usage for processing, exports, etc., from June 1 to August 31 in 2022 was estimated at 698 million bushels, which is up 36 percent from a year earlier but still trails the soybean usage level of 858 million bushels in 2020. The CBOT November soybean futures price closed at $13.65 per bushel on 9-30-22, compared to $12.56 in 2021, $10.23 in 2020, $9.06 in 2019, $8.45 in 2018, and $9.68 in 2017.  
 
The USDA Grain Stocks Report listed total U.S. wheat stocks at 1.776 billion bushels on 9-01-22, which is nearly the same as a year ago on September 1. The implied usage of U.S. wheat from June 1 to August 31 this year was 543 million bushels, which was down 24 percent from a year ago It was estimated that 591 million bushels of wheat were in on-farm storage on 9-01-22, which is 41 percent higher than a year ago. Both CBOT wheat futures prices and local wheat prices have remained at quite high levels in recent weeks compared to recent years prior to 2021, due to continued tight supply levels and solid wheat demand. The strong wheat prices are likely to continue into 2023, given the reductions in the projected 2022 U.S. wheat production and the prolonged drought conditions in many primary production areas for winter wheat.
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