Episode 100 - More Acres, Lower Yields: The Focus of August USDA Reports

Hunter Biram and Scott Stiles walk through the August USDA WASDE and Crop Production reports, where a recurring theme of more acres but lower yields shaped the outlook for soybeans, long grain rice, corn, and cotton. They dig into the surprising jump in corn and soybean acreage, the drought driving yield cuts from Texas through the western Corn Belt, and why cotton comes down to what gets harvested rather than what gets planted. Hunter and Scott also cover Arkansas' record projected soybean yield, a 50,000-acre increase in long grain rice, and a record soybean crush forecast. Even with tighter supplies, they explain how improved price expectations for the 2026/27 marketing year offer a bright spot against still-elevated input costs.

Transcript

Dr. Hunter Biram 0:00

USDA increased acreage estimates for soybeans, long grain rice, corn, and cotton in its August reports, but lower yield expectations offset much of those gains. Despite additional acreage, supplies remain relatively light, and tighter supplies are supporting improved price expectations for the 26-27 marketing year. That so much more on this episode of Morning Coffee amd Ag Markets. Fantastic. Good to be back with you. Man, I'm I'm happy to have you back. I really am. I always love talking about markets with you. And uh I love talking about programmatic planning. You know, we just spent spent some time looking at you know thinking about next year. I know that we got harvest, and a lot of farmers are probably thinking about just getting through harvest and cutting or picking whatever it is we're doing. But, you know, we got to start thinking about planning for next year and getting ready for loan renewal season for next year. And with that comes a lot of uh a lot of planning, trying to coordinate with county agents and coordinate with you know state offices and uh these regional experiment stations and extension stations, figuring out locations. And I'm glad that I've got you to go through that with.

Scott Stiles 1:20

We are seeing some improvement in uh commodity prices, but uh like you said, we still have to keep an eye on the big picture. We're not seeing any relief yet on the input costs. So it's gonna be another challenge in winter budgeting, and it is good to see the better commodity prices, but the margins are, you know, could still be thin uh given where fuel and fertilizer prices are and and uh the fact they remain sticky.

Dr. Hunter Biram 1:43

That's right. I mean, even if we had these dream prices like we had back in 2022, like right now, I mean, even if we had those, you still gotta do marketing. You still gotta participate in forward contracting, you know, and working with your local elevator. And you gotta know your cost if you're gonna be doing any kind of marketing to know breakevens, to know your kind of your risk threshold in terms of like at what point do you book, and what point do you say, you know what, I'm gonna wait a little bit longer. And so, yes, cost, super important, and costs have remained elevated since the Russia-Ukraine conflict. But even if we had great prices, you still gotta do marketing and you still gotta pay attention to what's going on there. So you got to know your costs and you gotta know the market. And so, with that, let's dive into this latest USDA WASDI report. And so for our listeners, USDA released its first survey-based production and yield estimates for the 2026 crop in the August 12th crop production and WASDI reports. These estimates incorporate farmer surveys, week 30, crop ratings, satellite imagery, and FSA certified acreage. Across some major field crops, USDA generally found more acres than previously estimated, but lower yields offset much of the additional acreage. And so with that, Scott, you know, the big thing seems to be more acres, but lower yields. When you look at these two reports, what surprised you the most?

Scott Stiles 2:57

Yeah, at the national level, what everybody was surprised about was that the USDA found more corn and soybean acres. And those that, you know, look at this from a historical perspective said that, you know, pointed out in this that we found a combined 2.8 million additional acres of corn and soybeans, which that's never happened. So I guess, you know, that cast some light back on the discussion about, you know, NASA's survey methods. You know, how did they miss, you know, 1.4 million acres of corn and and and 1.4 million acres of soybeans in their June survey work, you know. So I'm I'm not criticizing their methods, but the industry does, you know, make note of that. That that was a pretty, you know, dramatic change from the June survey to what FSA had uh certified at their offices. That's a lot of acreage. I mean, it's almost three million acres. It is. And you know, the trade going into the report was looking for corn acres to be down a little bit and and bean acres to increase some, you know, which that makes sense, you know, given the spike we saw in fertilizer in the spring and then the relatively better soybean prices. We thought we'd see a little bump up in bean acres, but for both to increase 1.4 million each, that was a that was a bit of a shock.

Dr. Hunter Biram 4:14

It really is, especially when you start thinking about the impact of the hormone's issues that we had at planting time and impacts to urea prices in particular, and you know, just how much corn demands of urea relative to soybeans, because soybeans doesn't require any. So the fact that both of those increased, it's really puzzling.

Scott Stiles 4:33

Mm-hmm. It is. I don't know. I mean, I guess the you know, that's a that's a debate for another podcast as you know, just uh the survey, you know, work is has been under the gun and and criticized in terms of it's just poor response rates and you know, I uh a whole litany of of issues with that. And uh and maybe that's that's what's in the background here. But um, but uh anyway, the the good news is if you want to call it that, is that you know, really the month-to-month change in production was was really modest just due to the fact that USDA lowered their their yield estimates by a noticeable amount this month. So that offset a lot of the acreage increase.

Dr. Hunter Biram 5:14

And so with those lower yield estimates, what do you think's driving those lower yields? I mean, from a crop quality standpoint.

Scott Stiles 5:20

Yeah. Well, what's driving the lower yields is just the drought in the far western states of the corn belt. If you look in the U.S. drought monitor right now, there's a a very defined corridor from Texas to the Canadian border that's uh an area of severe drought. So, you know, there's some dramatic declines in yields in compared to last year in Nebraska, the Dakotas, Kansas, Texas, a little bit in Minnesota and Wisconsin, but there's just all of those states are projected to have lower corn yields than than last year. And those that area of the of the corn belt has been hardest hit by drought. So that's where the big reduction in in corn yields and soybean yields came this month.

Dr. Hunter Biram 6:04

And and Scott, you this may be uh this is gonna expose my ignorance here, but like do we have state level changes or is it all national?

Scott Stiles 6:12

Yeah, Mass did publish their first state level yields this month. So yeah. You know, and up to this point they've just been, you know, they're using trend a national trend line yield, but this month they did publish state level yield estimates this month.

Dr. Hunter Biram 6:26

So with the state level estimates, have you looked to see like is a lot of that coming out out of Nebraska, maybe the Dakotas, Kansas?

Scott Stiles 6:33

Yeah, yeah. Yeah, that's those are the areas that you know are going to see yields below last year. You got, you know, there's some strong spots in the corn belt, like Iowa's uh corn yield was projected to be recorded. Iowa and Indiana both are expected to have record corn yields, but when you get out in the far west areas and the southern plains and the Great Plains, and you know, really all the corn production areas from Texas to Dakotas are gonna take, you know, a yield hit compared to last year.

Dr. Hunter Biram 7:03

So I'm gonna pivot now a little bit to more of our southern crops. You know, cotton may be the best example of acreage not telling the whole story. Uh you know, USDA added more than 600,000 planted acres, but cut yield by 74 pounds per acre. So what do you think is happening with the uh cotton crop to drive that?

Scott Stiles 7:19

Yep, they did find some more acres, but they lowered the yield quite a bit, and um they lowered the U.S. yield down to 798 pounds. You know, that's down 74 pounds from last month. Historically, that's pretty low. That's the lowest U.S. yield since 2015. What's driving that is the you know, the drought conditions in Texas. Texas alone is probably 55% of the U.S. cotton acres now. And they're, you know, the condition of the crops really poor. Monday, they had 34% of the crop was rated poor to very poor, and they're projected to abandon two million acres there. So that was a key driver. I think their state average yield in Texas was projected at, I think just off the top of my head, it's around 568 pounds. Next to them, Oklahoma state average was projected at 300 pounds. So wow. You kind of get a feel that, you know, from that, you know, that area has really been impacted by, you know, by the heat and the dryness. And of course, they're getting more of that this week. You know, these triple-digit temperatures that we're seeing here. Texas, Oklahoma, they're under that same high pressure dome. So there's just not any rain in sight uh for them this week. And you know, temperatures are close to 100. So it's anyway. I pulled my notes. 568 pounds. That's the projected state average for Texas. Oklahoma's is 300.

Dr. Hunter Biram 8:43

So And Scott, do you know off top of your head, like what the normal state averages are for those? I mean, I think Texas is normally around 800, isn't it?

Scott Stiles 8:51

Uh it may not be that high, but it's it's uh I mean, it it this year is quite a bit lower. See, like Oklahoma's last year was 912. Oh, so yeah, you over 600 pound drop from from last year. Texas was six hundred and twenty-nine last year. Okay. Okay.

Dr. Hunter Biram 9:08

So yeah. Wow, that's a that's a massive reduction, man. It's uh in a in Oklahoma, it's a third of what it normally is.

Scott Stiles 9:15

Mm-hmm. Yeah, yeah. So that's just uh that's really the story is that you know, with cotton, like we talk about, it's it's not what you plant, it's what you harvest, and you got so much non-irrigated acres out, acreage out in Texas, and uh they gotta have the rain.

Dr. Hunter Biram 9:30

That's right. That's right. So let's talk a little bit about our other southern crop, rice. You know, USD added about 50,000 acres of long-grained rice in Arkansas, and I think that nationally there was acreage that was added, but there's some reductions in other states. You know, what other things did you find interesting about rice in the slates report?

Scott Stiles 9:46

Yeah, yeah, that was the that was the the the the state level shock for me is is that um USDA found 50,000 more acres of long grain. We're really didn't expect to see that, but that's you know, that's confirmed with the you know the FSA certified acres. But, you know, on the other hand, a lot of that was offset. You had fairly large reduction in Missouri. So the combined drop in acres in Missouri and Louisiana was 45,000. So offset a lot of that. But you know, we did see some some other states increase acres. California's up just a little bit, Texas up a little bit, and Mississippi. So in the end, you know, we did pick up some long grain acres that nationally. And that bumped production up a little bit, 2.6 million hundredweight over last month. So we did did see a little increase in long grain production, but still in the grand scheme of things, it's the smallest long grain crop since 93. So historically, really low.

Dr. Hunter Biram 10:44

And so with that low acreage, I mean, do we see any revisions to the outlook for 26, 27 marketing year rice prices?

Scott Stiles 10:51

No, no change on on prices. Uh they kept it at at um 1350 100 or or 608 a bushel. So that's that was unchanged. You know, we did see a little uptick in ending stocks. They bumped that up 2.6 million hundred weight to 20.3. But I'm looking today, I mean, the market is is just brushed it off. I mean, you look at November and the September futures are up 21 cents today, so hadn't been you know bearish to the market, you know, even with some increase in stocks, but uh market's just brushing it off. But yeah, 608 a bushel is the season average forecast for the 26 crop compared to 468 for the for the 25 crop.

Dr. Hunter Biram 11:34

And lastly, Scott, with what time we have left, I want to talk a little bit about soybean crush. So it's projected at a record 2.78 billion bushels this year. What do you think is driving that growth and crush for soybeans?

Scott Stiles 11:45

Mm-hmm. Yeah, there's you know, there's strong meal demand. Moving a lot of, we're seeing some some daily flash reporting of uh of meal exports into the Philippines. So I'd say that that's that's encouraging, but also just the fact that there's really, you know, is good crush margins. So there's meal demand out there, and there's strong soybean oil demand for the for the biofuel. So there's you know, those are the those are the key drivers is just the you know, the strong biofuel demand is driven by you know the strong run-up that we've seen in crude oil this spring. So yeah, that's a good point. A record crush. And um just trying to think off the top of my head, it's over, you know, over 60% of bean demand, it's maybe around 65% of bean demand is is just tied to crush now.

Dr. Hunter Biram 12:31

So that's good. We need it. Oh, absolutely. And Scott, help me understand. I mean, when we think about demand, there's domestic market, international market. This crush that's happening, and you say that over sixty percent of bean demand is crushed, it's all gonna be used here, or exports are mostly gonna be here, some exported, or yeah.

Scott Stiles 12:52

I mean, a lot of the meal goes out in the international markets, and and Philippines is one there's other markets, but um Philippines is really strong buyer of our soy meal, so a lot of that's going on the international market. But biofuels, the bean oil demand's mostly domestic.

Dr. Hunter Biram 13:08

Well, Scott, I appreciate your time. Any other thoughts?

Scott Stiles 13:11

You know, better price outlook like we talked about. They kept that the same for soybeans this month, so eleven forty is the season average, you know, price outlook for the 26th crop, and that's up a dollar a bushel from 1040 last year. So that's that's encouraging. They pegged the season average for corn at uh 450. So that's up, you know, 35 cents a bushel from last year. So, and then cotton was at 75 cents. So, yeah, I think compared to 61.50 last year, I think is you know where they put old crop prices at. So that that's a key thing to point out is that there's a you know, there's a better price outlook across the board for all commodities, and the balance sheets are tightening up, you know, for all the crops. So, you know, if there's one bright spot this year, then that's it. It's tighter stocks, better price outlook. But uh, I wish we could say the same that we're seeing some relief on the cost, but we're not really seeing much of that yet. So you had to say today, you know, we're not seeing you know much change year to year in in their cost and our budgets.

Dr. Hunter Biram 14:11

Well, as my mom used to say, uh just uh take your victories when you can get them. Take your victories where you can get them, that's for sure. Well, Scott, thanks so much for your time today, everybody. Y'all uh stay tuned for the market report. Thank you.

Evan Ware 14:23

Back with your market report as of August 13th, 2026. Corn September futures are four dollars and forty-eight cents per bushel. That's up two percent from a month ago and up twenty percent from a year ago. Corn December futures are four dollars and seventy-two cents per bushel. That's up two percent from a month ago and up nineteen percent from a year ago. Rice September futures are fourteen dollars and twenty cents per hundred weight. That's up four percent from a month ago and up 11% from a year ago. Rice November futures are $14.60 per 100 weight. That's up 4% from a month ago and up 13% from a year ago. Soybeans November futures are $11.82 per bushel. That's down 1% from a month ago, but up 13% from a year ago. Soybeans March 27 futures are $11.98 per bushel. That's down 1% from a month ago and up 13% from a year ago. Cotton December futures are 83.5 cents per pound. That's up 2% from a month ago and up 23% from a year ago. Cotton March 27 futures are 85.42 cents per pound. That's up three percent from a month ago and up twenty-three percent from a year ago. Wheat July 27 futures are six dollars and ninety-three cents per bushel. That's up ten percent from a month ago and up twenty-two percent from a year ago. The US weekly average for peanuts is currently four hundred and sixty-six dollars per ton. That's up two percent from a month ago, but down fifteen percent from a year ago. Moving on to our fertilizer prices, urea is currently about five hundred and eighty dollars per ton. A month ago is five hundred and fifty dollars per ton. Three months ago seven hundred and ninety-six dollars per ton, and a year ago five hundred and ninety-eight dollars per ton. Ammonium nitrate is currently about four hundred and twenty dollars per ton. A month ago is four hundred and thirty-two dollars per ton. Three months ago is five hundred and seventy-eight dollars per ton. And a year ago is four hundred and thirty-five dollars per ton. Ammonium sulfate is currently four hundred and ninety dollars per ton. A month ago is five hundred dollars per ton. Three months ago is five hundred and forty-three dollars per ton. And a year ago is five hundred and fifty-eight dollars per ton. DAP is currently about nine hundred and forty-five dollars per ton. A month ago was nine hundred and fifteen dollars per ton. Three months ago is eight hundred and eighty-seven dollars per ton. And a year ago was eight hundred and eighty-one dollars per ton. Triple superphosphate is currently about eight hundred and fifty-eight dollars per ton. A month ago was seven hundred and ninety-five dollars per ton. Three months ago was seven hundred and seventy-one dollars per ton. And a year ago was seven hundred and ninety-five dollars per ton. Potash is currently about four hundred and eighty-five dollars per ton. Month ago was four hundred and fifty dollars per ton. Three months ago was four hundred and sixty dollars per ton. And a year ago was four hundred and sixty-eight dollars per ton. Now for our fuel prices, Arkansas Highway Diesel is currently five dollars and one cent per gallon. A month ago was four dollars and thirty-five cents per gallon, and a year ago was three dollars and thirty-eight cents per gallon. Arkansas Farm Diesel is currently about four dollars and forty-four cents per gallon. A month ago was four dollars and two cents per gallon, and a year ago was two dollars and forty-four cents per gallon. The Mississippi River at Memphis current rating is one point five four feet. The year ago is five point nine eight feet. That's your market report. Thanks for tuning in to another episode of Morning Coffee and Ag Markets. We hope that you have a great week.

Dr. Hunter Biram 17:48

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