May 2024

The mid-May update

May is the month when most of the corn and soybean crops are planted and when USDA provides the first official update on projections for the new crops. The weekly Crop Progress reports document planting pace, which is often used as a signal about potential production. The World Ag Supply and Demand Estimates (WASDE) report summarizes the usage projection changes since the Ag Outlook Forum. The combination of these reports this year have been supportive of corn prices, but mixed for soybeans.

The planting pace for both corn and soybeans started out very quickly, like last year, but has been delayed by a series of storms over the past two weeks. Figures 1 and 2 show the national planting pace data for corn and soybeans, respectively, on an annual basis since 1980. The light blue shaded area displays the range in planting pace, with slower pace towards the right of the graphs. For corn, planting was the slowest in 1983 and 1984 during April and early May. The 2019 corn crop set the slowing pace starting in mid-May. This year, national corn planting is running slightly below last year’s and the five-year average. However, it is good to see half of the nation’s corn crop is already in the ground. The years with the most similar corn planting progress to 2024 are 2009, 1996, and 2002. The national yield for the 2009 crop was above trendline, while 1996 was at trend and 2002 was below. Thus, analog years don’t provide a strong signal on production yet.

For soybeans, the early pace matched last year’s strong start, but the same weather delays have pushed planting progress back to near the five-year average. Searching for analog years here, the closest ones are last year, 2012, and 2020. And again, the signals are mixed. The 2020 soybean yield exceeded trend, whereas 2012 was well below with the drought that year and 2023 was slightly below trend.

Figures 1 and 2. US corn and soybean planting progress.

For the May WASDE report, USDA always stays with projections of trendline yields. Given the acreage shifts reported in the March Prospective Plantings report, those yields will lead to large crops. For corn, projected production in 2024 now stands at 14.86 billion bushels, which would be nearly 500 million bushels below last year’s record. For soybeans, 2024 projected production is 4.45 billion bushels, nearly surpassing the record set in 2021 and roughly 300 million bushels above last year. Projected supplies are once again ample.

Market traders were watching the WASDE report to see how USDA would adjust crop usage. The gray boxes in Tables 1 and 2 highlight the demand sides of the corn and soybean markets. For corn, 2023 was a bounce-back year. Production and usage rebounded higher, but the production gain greatly exceeded the usage gain and ending stocks swelled. The May update reduced the swelling a bit. Both ethanol and export usage for corn have run a bit quicker than USDA expected. Thus, USDA increased both categories by 50 million bushels each, lifting overall corn usage for the 2023 crop to 14.705 billion bushels and reducing the projected 2023-24 ending stocks to 2.022 billion bushels. But even with the reduction in stocks, USDA lowered its 2023-24 season-average price estimate to $4.65 per bushel.

For 2024, USDA has production falling and usage continuing to climb, but production still exceeds usage. Compared to the corn usage projections released at the Ag Outlook Forum, the latest update was encouraging. USDA continued the boost to the ethanol and export lines, adding 50 million bushels to each. Those additions bring total projected corn use to 14.805 billion bushels, just 55 million bushels below projected production. That limited the growth in ending stocks, with 2024-25 stocks set at 2.102 billion bushels. However, USDA stuck with the same projection for the 2024-25 season-average price at $4.40 per bushel, down 25 cents from the previous year and down $2.14 from 2022.

Where the 2023 crop year saw greater corn production and usage, the soybean market was working with fewer bushels and lower usage. While domestic usage has been growing with stronger biofuel production using soybeans, exports have taken a significant step back, dropping approximately 300 million bushels year-over-year. The May update didn’t include any adjustments to 2023 soy use, leaving 2023-24 ending stocks at 340 million bushels, up 76 million from the previous year. USDA also maintained its 2023-24 season-average price estimate at $12.55 per bushel, down $1.65 from the previous year.

The 2024 soybean year shows a bounce-back in production and usage, like corn had 2023. With production projected to be roughly 300 million bushels higher, the soy market hopes for a similar surge in usage. USDA’s outlook does have domestic crush and exports rising in 2024, but the surge can’t match the production growth. Compared to the Ag Outlook Forum estimates, USDA increased crush by 25 million bushels, but lowered seed and residual usage by 15 million and exports by 50 million. Soybean usage is increasing, to 4.36 billion bushels, but that is still 90 million bushels below expected production. Thus, the projection for 2024-25 ending stocks shoots up to 445 million bushels and the 2024-25 season-average price estimate sits at $11.20 per bushel, a decline of $1.35 per bushel. A $3 per bushel drop in prices over a two-year period is a painful adjustment.

Tables 1 and 2. US corn and soybena supply and usage.

Current futures are reflecting the recent delays in planting and have built in a weather premium for both markets. That premium is the big difference between projected profits or losses right now. At USDA’s current price estimates, the 2024 crops are projected to lose a bit of money. Iowa State University’s 2024 production cost estimates were roughly $4.60 per bushel for corn and $11.25 per bushel for soybeans. So, $4.40 corn and $11.20 soybeans come up a bit short. However, the weather premiums in the futures markets have boosted the futures-based outlook on season-average prices for 2024-25 to the $4.75–4.80 per bushel range for corn and the $11.60-11.80 per bushel range for soybean. The weather premiums change small losses into small gains. While prices aren’t what they were a couple of years ago, it is good to see a little potential profit in the markets currently.

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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