Dive Brief:
- U.S. corn production is estimated to reach a record high, threatening a global trade surplus that could drag down prices.
- Due to record yields, the U.S. Department of Agriculture on Friday predicted 15.3 billion corn bushels in 2023-24, up 108 million from its previous estimate.
- With production also increasing in other countries, the USDA said corn supply is "rising more than use." The agency lowered the season-average corn price received by producers to $4.80 per bushel, a decline to levels not seen since 2021.
Dive Insight:
Corn futures have stumbled in recent weeks, and fell to the lowest level in three years on Jan. 8. USDA's production estimates are higher than early trade predictions, which could send futures tumbling further.
Improvements in seed technology and farming practices have led to major production gains in corn as the amount of harvested acres declines. Farmers have increased production of corn and soybeans to capitalize on demand for feed and biofuels.
However, supply continues to outpace demand, especially as China, India and other countries report elevated corn production. U.S. exports to key markets such as China and Mexico declined in 2023 as prices became more competitive.
A similar story is playing out in soybeans. The U.S. is expecting production increases alongside other countries, driving down prices. The U.S. season-average soybean price for 2023/24 is projected at $12.75 per bushel, down 15 cents from previous estimates.
