WASHINGTON, DC, US — January is typically an uneventful month for crop production data, but the markets were caught off guard after the US Department of Agriculture (USDA) released a slew of reports on Jan. 12 showing surprising reductions in 2022 US corn and soybean production estimates.

The USDA estimated total corn production in 2022 at 13.730 billion bushels, down 200 million bushels, or 1.4%, from the most recent November estimate and down 1.344 billion bushels, or 9%, from the 2021 estimate of 15.074 billion bushels. The January estimate fell below the full range of Reuters trade expectations and was the lowest estimate since 2012.

The corn yield, however, was raised 0.6% to 173.3 bushels per acre, hitting the high side of the range of expectations. Despite the increase, harvested area was lowered, more than offsetting the small increase in average yield. While the number of acres planted to corn in 2022 earlier was trimmed to 88.579 million acres, down almost 5 million acres from 93.252 million acres planted in 2021, only 89% of the 2022 planted corn acres were harvested while 92% of the planted acres were harvested in 2021. 

Drought across parts of the western Corn Belt and Great Plains resulted in increased abandoned acres (unharvested) in 2022. Corn farmers harvested 1.455 billion bushels in Nebraska (down 22% from 2021 and 18% from the five-year average), 511 million bushels in Kansas (down 32% from 2021 and 30% from the five-year average) and 119 million bushels in Colorado (down 20% from 2021 and 23% from the five-year average). All three states saw significant declines in both yield and harvested area, the USDA said. 

In the Jan. 12 World Agricultural Supply and Demand Estimates (WASDE), the USDA reduced its forecast for the carryover of corn on Sept. 1, 2023, to 1.242 billion bushels, down 15 million bushels from the December outlook and down 135 million bushels from 1.377 billion bushels in 2022. The USDA also reduced its forecast for domestic use by 35 million bushels to 11.990 million bushels. Feed and residual usage was lowered 25 million bushels to 5.275 billion bushels, and exports were reduced to 1.925 billion bushels, down 150 million bushels, or 7%, from the December projection of 2.075 million bushels.    

Also challenging pre-report trade expectations was the revised US 2022 soybean production estimate. Many analysts expected the estimate to edge higher, but the USDA reduced the total estimate to 4.276 billion bushels, down 1.6% from its previous estimate of 4.346 billion bushels in November, and down nearly 190 million bushels, or 4.2%, from the 2021 production estimate. 

While the harvested soybean area fell within the range of trade expectations, the 2022 soybean yield did not. The USDA said the average yield was estimated at 49.5 bushels per acre, down 0.7 bushels from the November estimate, down 2.2 bushels from 2021, and below the full range of trade expectations.    

The USDA forecast the US carryover of soybeans on Sept. 1, 2023, at 210 million bushels, down 10 million from its December projection, and down 64 million bushels, or 23%, from 2022. The USDA also lowered its soybean export forecast to 1.990 billion bushels, down 55 million bushels from the December outlook, and down 168 million bushels, or 8%, from 2022.  

After the reports were released, both corn and soybean futures rallied and had yet to sink below pre-report levels as of Jan. 18.