Big Crops Get Smaller Pt. 2 | Drought, Demand & Biofuels
Arlan Suderman, Chief Commodities Economist at StoneX, reviews the latest US crop outlook following his Midwest tour and the Farm Progress Show.
Key Takeaways
US corn yields likely to be revised down after August stress
Storage constraints and weak basis pressure cash markets
Soybean exports remain uncertain without Chinese demand
Corn Yield Outlook
Suderman noted that USDA’s August estimate of 188.8 bushels per acre is expected to fall when September data is released. Weather stress and unusual firing of top leaves suggest yield loss across the Midwest. “The expectation is that August was not good to the crop and that we have come down from that 188.8 yield” [1:35].
Demand Dynamics
While ethanol and export demand for corn remain strong, Suderman cautioned against over-optimism. USDA has increased feed usage numbers, but with cattle no longer crossing the border from Mexico, much of that corn is now exported south instead of consumed domestically. This leaves USDA with “playroom” to adjust demand figures if yields fall further.
Storage and Basis Pressure
With a large crop and no soybean sales to China, storage constraints are acute. Suderman explained that many elevators are offering only cash terms with weak basis levels, particularly in the Western Midwest. He urged producers to secure outlets ahead of harvest to avoid disruptions. “Do they have a place to take their grain? They should be working on that now” [8:12].
Soybeans and Biofuels
Soybeans face a mixed outlook. Yields may hold up better than corn in some areas, but exports are under pressure as China has already secured large volumes from South America. Domestic demand is supported by strong biofuel programs, although crush capacity expansion lags. Suderman concluded that biofuels provide an offset, but cannot replace lost Chinese business in full.
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