April 2024

Preparations for the upcoming crop year

With the calendar shift into April, farmers are gearing up for planting. USDA has provided four major reports that outline crop supplies and demand estimates for both the 2023 and 2024 crops. With the March and April World Ag Supply and Demand Estimates (WASDE) reports, USDA has provided the markets an update on the shifting set of crop usage for the 2023 crops. With the March releases of the Grain Stocks and Prospective Plantings reports, USDA revealed the sizable crop stocks remaining in farmer hands as we go into planting and the differences between farmers’ planting intentions and USDA’s early projections on crop acreage. To summarize how these reports have adjusted the 2024 outlook, I have combined the latest crop usage estimates for the 2023 crops from the April WASDE report, the new estimates for 2024 plantings from the Prospective Plantings report, and the yield and 2024 crop usage estimates from the Ag Outlook Forum to create tentative balance sheets for corn and soybeans. Take these balance sheets with a chunk of salt (probably need the entire salt block) as USDA will likely make several significant adjustments to the 2024 crop usage estimates, starting in the May WASDE report (the first WASDE report that will have 2024 crop estimates). These balance sheets provide a good starting point for discussing the opportunities and challenges for the upcoming crops.

Corn in 2024

Let’s start with corn. Corn usage has been rebuilding, but it hasn’t been able to keep up with production. Thus, ending stocks are building and prices have retreated. The March stocks report verified that and the April WASDE report reflected that as well. Looking at the annual numbers, USDA boosted 2023 feed and residual usage by 25 million bushels and ethanol usage by 25 million. The combination lowered 2023-24 ending stocks to 2.12 billion bushels. However, that is 762 million bushels more than the 2022-23 ending stocks. While corn usage grew by roughly 900 million bushels, corn production increased by 1.69 billion bushels. So corn usage is fairly strong, but supplies are overwhelming, and that remains the challenge looking forward. The Prospective Plantings report showed fewer corn acres than both USDA and the trade expected, but expected corn production is still substantial. USDA’s initial estimate for 2024 corn plantings was 91 million acres. The Prospective Plantings survey found farmers intend to plant 90 million acres of corn. Keeping the ratio of planting to harvested acres and the yield from the Ag Outlook Forum and combining that with the new estimates of corn area leads to an adjusted 2024 production estimate of 14.88 billion bushels, down 159 million from the earlier projection. Add that to the large corn stocks from 2023 and total corn supplies for the 2024 marketing year are projected to be north of 17 billion bushels.

If USDA were to stick with their Ag Outlook Forum 2024 corn usage estimates, then feed and residual usage is projected to be 50 million bushels higher, corn usage for ethanol would be steady, and exports would increase by 50 million. So total corn usage continues to grow, but it would still be below production. Production would exceed usage by roughly 180 million bushels, implying another year-over-year increase in ending stocks. Higher stocks tend to lead to lower prices and USDA’s early estimate for the 2024-25 season-average price is $4.40 per bushel, 30 cents below the current year’s price.
While corn stocks are building a little slower than expected, soybean stocks are building a little faster. Looking at the 2023 crop, domestic crush of soybeans was held steady, seed and residual usage was reduced by 10 million bushels, and exports fell by 20 million. 2023-24 ending stocks are now set at 340 million bushels of soybeans, up 76 million from the 2022-23 final level.

Table 1. Corn supply and use.

Soybeans in 2024

Soybean planting intentions came in at 86.5 million acres, well below USDA’s initial estimate, but slightly above trade expectations. Given the new acreage estimate, projected soybean production is slightly over 4.45 billion bushels, just below the 2021 record. At the Ag Outlook Forum, USDA outlined 2024 domestic crush demand at 2.4 billion bushels, with exports taking 1.875 billion bushels. If USDA held to those usage estimates now, 2024-25 ending stocks would grow to 409 million bushels, the highest since 2019-20. So, both crops have growing usage, but even stronger production. The 2024-25 season-average price for soybeans is set at $11.20 per bushel, down $1.35 from the 2023-24 estimate.

Soybean supply and use.

Price Projections

The string of USDA reports provided a slight boost to corn and soybean prices. Prior to the end of March, traders had been preparing for sizable stocks for both crops and the potential for larger projected supplies given early acreage forecasts. Figure 1 shows 2024-25 projected prices based on the futures markets. Since the beginning of the year, those price projections had worked their way lower. But the month of March provided a partial rebound. With estimated production costs at $4.60 per bushel for corn and $11.25 per bushel for soybeans, both crops have edged back to the positive side of returns. However, the profit outlook for this coming crop year is much tighter than the last three years and they could slip away quickly.

Figure 1. 2024-25 projected season-average prices.

 

Listen to the latest Market Outlook video for further insight on outlook for this month.

 

Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu

Author

Chad E. Hart

extension economist
Iowa State University
468E Heady Hall
515-294-9911
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