​The monthly USDA World Supply and Demand Estimates (WASDE) Report was released on November 9, which may have some impact corn and soybean markets in the coming months. The WASDE Report made minor adjustments to projected 2022-23 U.S. corn and soybean carryover estimates at the end of the current marketing year on August 31, 2023, as compared to estimates last month. The biggest surprise to the grain markets was a slight increase in the estimated corn and soybean production levels for 2022 compared to a month earlier, which resulted in slightly higher carryout levels for both corn and soybeans in the November WASDE Report.
 
Most grain marketing analysts viewed the latest USDA reports as somewhat “bullish” for future corn prices and “neutral” for soybean prices. December corn futures closed at $6.64 per bushel on the Chicago Board of Trade (CBOT) following the November 9 report, which compares to a price of $6.96 per bushel following the WASDE report on September 12 and to $5.55 per bushel following the November WASDE report in 2021. CBOT November soybean futures closed at $14.52 per bushel following the latest WASDE report, which was below the $14.88 per bushel price following the September report and compares to $11.38 per bushel following the WASDE report in November of 2021.
 
The 2022 national average corn yield is now estimated at the record level of 172.3 bushels per acre, which was increased from 171.9 in October. The 2022 harvested corn acreage in the U.S. was maintained 80.8 million acres, resulting in a total estimated 2022 corn production of 13.93 billion bushels. This compares to total U.S. corn production levels of near 15.1 billion bushels in 2021, 14.1 billion bushels in 2020 and to 13.6 billion bushels in 2019. Total corn usage for the 2022-23 year is now estimated at just over 14.175 billion bushels, which would be down from 14.956 billion bushels in the 2021-22 marketing year. Corn export levels and the amount of corn used for both feed and ethanol production during the current marketing year, which ends on August 31, 2023, were all reduced from corn usage levels during the 2021-22 marketing year.
 
USDA is now estimating 2022-2022 U.S. corn ending stocks at 1.182 billion bushels, which was 10 million bushels above the October estimate. This compares to carryout levels of 1.338 billion bushels in 2021-22, 1.24 billion bushels in 2020-21, and 1.99 billion bushels for 2019-20. Based on current estimates, the U.S. corn carryout to use ratio would be at 8.3 percent for 2022-23, which compares to 9.2 percent for 2021-22, 8.3 percent in 2020-21, and 14.4 percent in 2019-20. The continued tighter corn stocks could result in the potential for some short-term rallies in the cash corn market and continued tight basis levels at many locations in the coming months.
 
The 2022-23 U.S. soybean ending stocks in the recent WASDE Report were estimated at 220 million bushels, which was an increase of 20 million bushels compared to the October USDA report. The projected soybean ending stocks compare to 274 million bushels in 2021-22 and 256 million bushels in 2020-21; however, the projected 2022-23 carryout level is well below the ending stocks of 523 million bushels in 2019-20 and 913 million bushels in 2018-19. The soybean stocks-to-use ratio for 2022-23 is estimated at 5 percent, which is down from down from 6.1 percent on 2021-22 and well below levels of 11.5 percent in 2019-20 and 23 percent for 2018-19.
 
Total U.S. soybean production for 2022 was estimated at just under 4.346 billion bushels in the November report, which was increased by 33 million bushels from the October estimate and was slightly higher than the average grain trade projection. Total soybean demand for 2022-23 is projected at 4.414 billion bushels, which is down slightly from 4.465 billion bushels in 2021-22. The anticipated reduction in U.S. soybean demand in the coming year is primarily due to a decrease in the expected soybean export levels in 2022-23. The fact that soybean ending stocks remain fairly tight may offer some opportunities for short-term rallies for farm-level soybean prices in the coming months, especially if there are any weather-related production issues in South America.
 
Based on the November WASDE report, USDA is currently estimating the U.S average on-farm cash corn price for the 2022-2023 marketing year at $6.80 per bushel, which was unchanged from the October report. The USDA price estimates are the expected average farm-level prices for the 2022 crop year from September 1, 2022, to August 31, 2023; however, they do not represent estimated prices for either the 2022 or 2023 calendar year. The projected USDA average corn price of $6.80 per bushel would be the highest since 2012-13 following the 2012 drought. The 2022-23 estimated corn price compares to recent national average corn prices of $6.00 per bushel for 2021-22, $4.53 per bushel for 2020-21, $3.56 per bushel for 2019-20, and $3.61 per bushel for 2018-19. 
 
USDA maintained the projected U.S. average farm-level soybean price for the 2022-2023 marketing year at $14.00 per bushel, which was also the same as the October estimate. The projected national average soybean price would be the highest in the past decade. The 2022-23 projected national average soybean price compares to prices $13.30 per bushel in 2021-22, $10.80 per bushel for 2020-21, $8.57 per bushel for 2019-20, $8.48 per bushel for 2018-19, and $9.35 per bushel for 2017-18. 
 
USDA 2022 Corn and Soybean Yield Projections Below 2021 Yields
Based on the USDA Crop Production Report released on November 9, the projected U.S. average corn yield for 2022 will be 172.3 bushels per acre which was a decrease from the record U.S. corn yield of 177 bushels per acre in 2021. This compares to other recent U.S. corn yields of 171.4 bushels per acre in 2020, 167.5 bushels per acre in 2019, and 176.4 bushels per acre in 2018. The projected 2022 U.S. harvested corn acreage is 80.8 million acres is a decrease of 5.3 percent from 85.3 million acres that were harvested last year.
 
The November USDA Report increased the projected 2022 corn yields from the October report in Illinois by 5 bushels per acre, Indiana by 4 bushels, Iowa and North Dakota by 2 bushels per acre, and Minnesota by 1 bushel per acre. The latest USDA report left the projected corn yield unchanged from a month earlier in Wisconsin, while reducing estimated yield levels in Nebraska and South Dakota by 4 and 5 bushel per acre respectively. Minnesota is now projected to have a statewide average corn yield of 191 bushels per acre in 2022 compared to 177 bushels per acre in 2021, with Iowa are at 202 bushels per acre in 2022 compared to 204 bushels per acre in 2021. Other projected 2022 State average corn yields are Illinois at 215 bushels per acre, Indiana at 191 bushels per acre, Ohio at 186 bushels per acre, North Dakota at 143 bushels per acre, and Wisconsin at 182 bushels per acre. The drought-stricken States of Nebraska and South Dakota are projected at 168 and 125 bushels per acre respectively.
 
USDA is estimating the 2022 U.S. soybean yield at 50.2 bushels per acre, which is an increase of 0.4 bushels from the October estimate. The projected 2022 national average soybean yield 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, the record U.S. soybean yield of 52.0 bushels per acre in 2016. The 2022 harvested soybean acreage is projected at 86.6 million acres, which up slightly from the 2021 U.S. soybean acreage of 86.3 million acres; however, the 2022 acreage is well above the U.S. soybean harvested acreage of 82.6 million acres in 2020 and 74.9 million acres in 2019. 
 
USDA is estimating the 2022 Minnesota soybean yield at 50 bushels per acre, which is up from 47 bushels per acre in 2021, while Iowa is projected at 59 bushels per acre in 2022, compared to a record 63 bushels per acre in 2021. Other States with strong soybean yields for 2022 include Illinois at 64 bushels per acre, Indiana at 59 bushels per acre, Ohio at 55 bushels per acre, Wisconsin at 54 bushels per acre, and North Dakota at 36 bushels per acre. The 2022 statewide yield estimate in drought-stricken Nebraska is projected at 50 bushels per acre, which compares to 63 bushels per acre in 2021, while the South Dakota yield is estimated at 39 bushels per acre in 2022, compared to 40 bushels per acre in 2021.

On any given day, farm operators and others can get grain price quotes from the CME Group, also known as the Chicago Board of Trade (CBOT), in “real-time” on their computer or I-phone. Almost as quickly, they can get current and future corn and soybean market price quotes from local grain elevators, ethanol plants, and processing plants. The difference between the local grain price and the CBOT price is known as “basis”. Understanding how basis works and the seasonal trends associated with basis can be an important factor in making corn and soybean marketing decisions.  
 
More specifically, “basis” is the difference between the local grain price quote on a specific date and the CBOT price for the corresponding futures contract month. Local harvest price quotes for corn and soybeans would typically correspond to the December CBOT corn futures price and the November CBOT soybean futures price. By comparison, storing the corn or soybeans after harvest and selling the grain via a forward contract in June or early July the following Summer would have the basis level correspond to the July CBOT corn or soybean futures.
 
A “narrow” or “tighter” basis means that the local corn or soybean price is getting closer or above the corresponding CBOT price, while a “wide” or “widening” basis reflects local grain prices that have a greater margin below the CBOT prices. In many years up until recently, farmers in the Upper Midwest dealt with “negative” basis levels, which means than local corn and soybean prices are lower than the corresponding CBOT prices. Areas near the Mississippi River ports or in the Southern U.S more typically have “positive” basis levels, where local grain prices are higher than CBOT prices. However, there have been several areas of the Upper Midwest that have had “positive” basis levels for corn and soybeans at certain times during 2021 and 2022.
 
While the definition of “basis” may seem quite simple, the dynamics of understanding basis can be quite complex. Basis is variable at different locations and can vary throughout the year, or suddenly be adjusted due to changing dynamics in grain market fundamentals. Following are the main factors that affect basis and can lead to changes in basis levels:

• Geographic Variations--- Corn and soybean basis can vary greatly from location-to-location, largely dependent on the amount of the local grain production to be used as livestock feed or for use in processing and ethanol production. Therefore, basis levels tend to be wider in Western Minnesota and the Dakota’s than in Southern Minnesota, which has a high amount of livestock production, as well as several ethanol plants and soybean processing plants.
• Transportation Costs --- This is the cost of shipping grain from the point of local sale to the final destination point, whether it be for use within the U.S. or transported to the ports to be shipped for exports to other countries. For example, areas that utilize a large percentage of the corn and soybean production in the local area have less grain to be transported to the ports or to other portions of the U.S. will typically have a tighter basis level. In addition, being closer to the Mississippi River, an important port, or a major rail line tends to reduce transportation costs and result in tighter basis levels, bot not in all instances.
• Supply and Demand --- The overall U.S. grain supply, based on crop production for a given year and grain carryover levels from the previous year, along with the grain usage for livestock feed, processing, ethanol production, and exports, can result in year-to-year variations in basis levels. For example, the 2021 and 2022 corn and soybean basis levels in many areas have been tighter than normal due to the strong demand for exports to China and increased domestic demand for livestock feed and processing. Poor crop yields in a local area can also affect basis in a given year. Local areas that had below average corn yields in either 2021 or 2022 have had a “positive basis” at certain times for corn and soybeans, due to strong local corn demand for feed usage and ethanol production, as well as demand at soybean processing plants.
• Storage and Interest Costs --- In a normal year, both CBOT corn and soybean futures prices and cash prices tend to be the lowest at harvest time and then increase by the following Summer. As the time gets closer to the actual date of delivery for the grain, depending on demand, the local grain prices may be stronger than the CBOT prices, resulting in tighter basis levels. The basis situation in the Upper Midwest in 2021 and 2022 has been different than normal due to a combination of lower-than-expected crop yields, together with strong demand for corn and soybeans. The rapidly increasing interest rates in recent months has resulted in a much higher cost of storing grain until next Summer, which encourages farmers to sell the grain in the next few months in order to take advantage of the current tighter basis levels. 

 
There is currently a wide range in harvest-time corn basis levels the Midwest, depending on 2022 corn yields and demand for corn usage. For example, in portions on Nebraska and Kansas that were impacted by the drought in 2022, the early November corn basis level is +$.50 to +$1.50 above the nearby CBOT December corn futures price, which is a much different pattern than normal. By comparison, corn basis levels in areas of Southern Illinois are ($.50) to ($1.00) per bushel below December CBOT price, which is a much wider basis level than normal, resulting from reduced barge traffic on the lower Mississippi River due to low water levels. The national average corn basis level on November 3 was +$.05 per bushel above the CBOT December futures price.
 
The corn basis level on November 3 in Southern Minnesota ranged from about ($.25) per bushel under the CBOT December futures price to +$.15 above the CBOT price. Soybean basis levels in Southern Minnesota on November 3 generally ranged from ($.15) under to +$.05 over the CBOT January futures price, with some soybean processing plants as high as +$.40 above the futures price.  In the six years (2015-2020) prior to 2021, early November corn basis levels in Southern Minnesota had typically averaged ($.35) to ($.45) per bushel below the nearby CBOT futures price and soybean basis levels were ($.40) to ($.90) per bushel under futures prices.
 
Currently, many farmers are quite “bullish” about grain market prices in 2023, meaning that they feel there is a good chance of corn and soybean prices rising in the coming months. The current basis levels for both crops in many areas are encouraging producers to sell their grain in the next few months, rather than waiting until next Summer to market the grain. Corn futures and cash prices are currently projected to stay fairly steady from now until July of 2023, meaning there is very little difference in the expected basis levels by next Summer. At soybean processing plants in Southern Minnesota, the soybean basis was +$.40 per bushel on November 3, compared to minus ($.15) per bushel in July of 2023, so even though the CBOT futures price for July is $.16 per bushel higher than the January price, the cash soybean bid for July is ($.39) per bushel lower than the current cash bid.
 
There are several grain marketing tools available for farmers to utilize besides cash sales, including a variety of hedging, options and basis contracts, Typical hedging or options contracts lock in the CBOT futures price but not the cash price, meaning that there is still basis risk. For example, a “hedge-to-arrive” contract locks in a CBOT futures price but the basis is not finalized until the futures contract is cleared and the grain is sold. By comparison, a basis contract locks in the basis but keeps the final price open depending on changes in the corresponding CBOT futures price and actual cash price at the time of delivery. Depending on an individual’s willingness to assume some market risk, they could also sell the grain for cash to realize the advantage of the current basis levels and take a CBOT options or futures price position to keep some upside potential in the corn and soybean markets.
 
Most grain marketing strategies, including storing unpriced grain in a bin on the farm, involve some level of price and/or basis risk. Understanding the dynamics of basis in corn and soybean market prices is a key element in analyzing the various types of grain marketing contracts that are available to farm operators. Iowa State University has some good information available on understanding basis and various grain marketing strategies. This information is available on the “Ag Decision Maker” website at: https://www.extension.iastate.edu/agdm

​As the 2022 harvest season is rapidly drawing to a close, many areas of the Corn Belt are now in a moderate to severe drought, with conditions worsening in the past couple of months. The latest “U.S. Drought Monitor” released on October 27 places all of Iowa, Nebraska, South Dakota, Indiana, Kansas, and Missouri at some level of drought, as well as much of the major crop producing areas of Minnesota, Illinois and North Dakota. Currently, approximately 60 percent of the tillable crop acres in the U.S. are being impacted by some level of drought. The National Drought Mitigation Center, which produces the updated U.S. Drought Monitor on a weekly basis, indicated that current conditions are comparable to the Fall of 2012, when over 61 percent of the U.S. crop acres were impacted by some level of drought.
 
According to the latest U.S. Drought Monitor, nearly all of Nebraska, Kansas, Oklahoma, and North Texas is now categorized to be in either the extreme drought (D3) or severe drought (D2) category, with a growing portion of that region in an exceptional drought (D4) category. There is a growing area of worsening drought in the Ohio River Valley and Southern Mississippi River basin area. Nearly the entire western two-thirds of the United States is listed in some level of drought at the end of October. Some Western States and Great Plains States have been dealing with drought conditions for two to three years. Areas that are in the extreme (D3) or exceptional (D4) drought areas are more likely to incur significant crop loss and have extremely limited forage production.
 
Based on the U.S. Drought Monitor for Minnesota on October 27, all areas of the State except the Arrowhead region and a small portion of North Central and Northwest Minnesota were categorized in some level of drought. Nearly the entire Southern half of the State was in the “moderate” to “severe” drought category, with a small portion of Southwest Minnesota and a larger area just west and south of the Twin Cities metro area in an “extreme” drought category. Back in mid-Summer of 2022, very few areas were listed in any type of drought category.
 
Sometimes the “Drought Monitor” is somewhat misunderstood. It is meant to measure the overall long-term impacts of extended drought conditions, as compared to representing current crop conditions. This is why some areas that are listed in “moderate” or “severe” drought may still have had fairly good crop yields in 2022, even with below average rainfall, depending on the timeliness of the rainfall events during the growing season. Some portions of the Upper Midwest also benefitted from starting the 2022 growing season with average to above average levels of stored soil moisture, which has also helped maintain crop development through some very dry periods during the Summer months.
 
The continued drought across the region is certainly a concern as we look forward to the 2023 growing season, with stored soil moisture levels across the Midwest at historically low levels in many locations. The post-harvest stored moisture levels at many reporting stations ranges from near zero to only a few inches in the top five feet of soil, compared to normal levels of six to seven inches of stored soil moisture in late October. Nearly 75 percent of the primary growing areas in the U.S. for winter wheat are in moderate, severe or extreme drought conditions, which is at the highest level in over twenty years. Winter wheat is seeded in the Fall and harvested the following Summer. Dry soil conditions in the Fall can result in poor germination and stunt the early growth of the winter wheat, which can result in yield reductions the following year.
 
The intense drought conditions in some corn and soybean production areas can also lead to challenges with Fall fertilizer and manure applications, as well as making Fall tillage more difficult. Nitrogen fertilizer costs nearly three times as much as it did two years ago, so farmers need to carefully consider Fall soil conditions if they plan to apply anhydrous ammonia this Fall. Producers may also want to limit their Fall tillage or consider the use of cover crops to reduce the potential for wind erosion during the Winter months.
 
According to precipitation data at the University of Minnesota Southwest Research Center at Lamberton, drought-like conditions have existed for the past 2-3 months. From June 1 to October 28, 2022, the Lamberton location had received only 6.57 inches of precipitation, which is 9.73 inches less than average, and represents only 40 percent of the normal rainfall amount during the Summer and Fall months in 2022. By comparison, the U of M Research Center at Waseca in South Central Minnesota received close to normal precipitation in June, July and August but has become quite dry in September and October. Waseca has received only 1.08 inches of precipitation in September and October, while Lamberton has received only .93 inches. Other two-month precipitation totals for September and October from the National Weather Service, included Wheaton at .47 inches and Windom at .62 inches, which were both the driest ever recorded, and New Ulm at .60 inches, the third driest in history.
 
The warm, dry weather during late September and October has allowed the Fall harvest season to progress quite rapidly in most areas of the Upper Midwest. By the end of October, soybean harvest had been completed and corn harvest was about 80-90 percent completed across southern Minnesota. Overall, the “whole-field” corn and soybean yields across the Midwest were highly variable, even in the same county or township, depending on the amount and timeliness of rainfall events during the growing season. Some areas of Southern Minnesota and North Central Iowa had some of their best corn and soybean yields ever, while farmers in Nebraska, Western Iowa and portions of Southern south Dakota had greatly reduced crop yields due to the drought impacts in 2022.
 
The good news for all producers regarding the 2022 corn harvest has been the low harvest moisture of the corn coming out of the field, and the high quality of the corn. Most of the corn being harvested in Southern Minnesota in the past few weeks has been at 15-18 percent moisture, meaning it can go directly to farm grain bins with very little or no additional drying, or can be hauled to grain purchasers with very little price dockage for excess kernel moisture. The rapid field dry down of the corn is saving most producers $30.00-$35.00 per acre in anticipated corn drying costs. Most of the corn being harvested in Southern Minnesota has had a test weight that is at or above the standard test weight for corn of 56 pounds per bushel, which also adds value to the corn.
 
The fire danger throughout in many areas remains extremely high due to the very dry conditions and frequent windy days. These conditions can quickly ignite field and grass fires that can cause significant damage. Farm operators need to use extra caution with farm machinery, grain trucks and other vehicles in the very dry fields. They also need to make sure that fire extinguishers are working properly and take other necessary fire safety precautions. The general public must also take care not to accidentally ignite a fire near farm fields, or in other rural areas. The ongoing drought conditions in many regions are also highly visible with the extremely low levels of lakes, rivers, and streams. In some instances, areas that have suffered intense drought levels for two or three years could also be impacted by reduced ground water levels.
 
Based on the weather data in Southern Minnesota, the Fall precipitation pattern in 2022 is very similar to the pattern in the fall of 2011. Of course, the Fall of 2011 was followed by the major drought in the Summer of 2012, which was quite intense in many areas of the Midwest and across the U.S. The Summer of 2012 was driest since 1988, another major drought year, and was the second hottest Summer on record, trailing only 1936. The 2012 drought caused nearly $30 billion in agricultural losses, resulting in a loss of approximately 25 percent of the U.S. corn and sorghum crops, as well as major impacts on hay and pasture production and large financial losses to U.S. beef producers. On the other hand, both 1976 and 1952 also had very dry conditions in the Fall in the Midwest; however, both years were followed by above normal precipitation and fairly good crop production in the following year. So, there is no certainty when it comes to predicting long-term weather patterns based on current conditions but there is certainly cause for some concern as we look ahead to the 2023 growing season.

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: kent.thiesse@minnstarbank.com
 
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/.

​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.