Economic and Policy Update

Page 1

University of Kentucky Department of Agricultural Economics

Economic & Policy Update Volume 15, Issue 10

Featured Articles: USDA Provides Production and Price Update as Harvest Enters Home-Stretch - Todd Davis Inheritance Tax - Suzy L. Martin UK CES & CEDIK: Strengthening Community Economic Development - Karen Fawcett Tobacco and the TTP - Will Snell Prospects for Winter Backgrounding in 2015 - Kenny Burdine and Greg Halich

Edited by: Will Snell & Phyllis Mattox

October 28, 2015

USDA Provides Production and Price Update as Harvest Enters Home-Stretch The August and September USDA Crop Production and WASDE reports have so far disappointed those who were looking for USDA to confirm their belief that this summer’s wet weather in several Eastern Corn Belt states significantly reduced yields and the size of the US corn and soybean crops. These reports have surprised and confounded some analysts and farmers who were expecting yields lower than projected by USDA. Hope, however, springs eternal. Those looking for production losses to spur the corn and soybean markets higher pinned their hopes on the October Crop Production and WASDE reports as they believed these reports would finally show lower yields and production. The October WASDE is important as it includes a larger percentage of harvest data as well as USDA:FSA Certified Acreage data. The Certified Acreage data is helpful in measuring the amount of prevented planted acreage or changes in intentions that wasn’t adequately reflected by the June 30th Acreage report. A pre-report survey of analysts expected the Crop Production report to project the U.S. corn yield to be reduced to 166.4 bu./acre from the September estimate of 167.5 bu./ acre. In addition, the analysts were also expecting the 2015 corn crop to decrease from the September projection of 13.585 billion bushels to an expected 13.461 billion. USDA continued to disappoint those expecting a lower corn yield as the October Crop Production report projects the 2015 corn yield at 168 bushels/acre which is a half-bushel increase over the September projection. If realized, this would be the second largest corn yield on record. USDA did trim the size of the 2015 corn crop, slightly, from the September report. USDA reduced planted and harvested corn area

from the September report but the increase in yield mostly off-set the reduction in harvested area. The 2015 corn crop is currently projected at 13.555 billion bushels which is 31 million bushels lower than the September estimate. The 2015 crop, if realized, would be the third largest corn crop in history. Analysts also expected USDA to lower the 2015 soybean yield slightly from the September report by an expected 0.2 bu./ acre to 46.9 bu./acre. USDA continued to surprise analysts & farmers by increasing the projected soybean yield from 47.1 bu./ acre from the September estimate to 47.2 bu./acre in October. The October report reduced 2015 planted and harvested area by 1.1 million acres from the September report. The impact of the lower harvested area was partially off-set by the increase in yield for a net reduction in production of 47 million bushels. USDA is forecasting the U.S. soybean crop to be 3.888 billion bushels which would be the second largest crop in history record, if realized, and would be 39 million bushels smaller than the record 2014 soybean crop. USDA is currently projecting U.S. corn stocks to decline by 170 million bushels from the previous marketing-year to 1.56 billion bushels. The corn market will not be near the tight inventory levels that supported prices above $5/bushel in 2012 or 2013. USDA’s projected U.S. farm price for the 2015-16 marketing-year is $3.80/bushel which, if realized, would be $0.10/bushel greater than last year’s price. Continued on page 2


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.
Economic and Policy Update by Kentucky Ag Programs - Issuu