FOCUS ON AG

Written by Kent Thiesse

Farm Management Analyst and Senior Vice President, MinnStar Bank
October 2, 2023
HARVEST SEASON BEGINS IN MANY AREAS
The warm late growing season during September this year has pushed the 2023 corn and soybean crop very
rapidly toward maturity. By the end of September, soybean harvest was 25 percent or more completed in many
portions of Upper Midwest, while some areas still needed a bit more time for soybeans to fully mature. Many
corn hybrids had also reached physiological maturity by late September and were also ready to be harvested;
however, some producers are hoping for some significant field dry-down of the corn prior to harvest.

As of September 27, a total of 2,751 growing degree units (GDU’s) had been accumulated since May 1 at the
University of Minnesota Southern Research and Outreach Center at Waseca, which is comparable to many areas
of Southern Minnesota and Northern Iowa. The Waseca location has not yet had the first freezing temperatures
of the year, so GDU accumulation for the year continues. The 2023 GDU accumulation at Waseca has exceeded
the normal GDU accumulation by 12 percent and was 122 GDU’s above the 2022 GDU accumulation in late
September. The extra growing degree units, combined with dry weather in September, helped this year’s corn
and soybean crop reach maturity, as well as to dry down rapidly in the field.

Most soybeans have now reached maturity and soybean harvest has been underway for the past couple of weeks
in many locations across Southern Minnesota and Northern Iowa. As expected, soybean yields have been highly
variable across the Upper Midwest due to differing impacts from rainfall amounts and timeliness of rainfall in
many locations, as well as moderate to severe drought conditions in many segments of the region. Generally,
the soybean yields have been average or slightly above and much more consistent in areas of Iowa, Sothern
Minnesota, and the Eastern portions of South Dakota, as well as in Illinois and Indiana, that were fortunate
enough to receive more timely rainfall during the growing season. Soybean yields in areas that were impacted
by drought and less timely rainfall have been well below the crop insurance APH (average) yields.

Most of the corn in the Upper Midwest has reached physiological maturity, which is the “black layer” stage, or
is very close to reaching maturity. Corn is usually at 30-32 percent moisture when it reaches the “back layer”
stage, and then begins to dry down naturally in the field. Ideally, growers like to see corn dried down in the field
to at least 20-22 percent moisture, or lower, before they harvest the corn. This greatly saves on corn drying costs
and improves the quality of the corn being harvested and going into storage. Corn is usually dried down to a
final moisture content of 15-16 percent moisture for safe storage on the farm until the following Summer.

Corn will dry down about 0.50 % per day naturally at an average daily temperature of 60 degrees F, which
increases considerably at higher temperature levels, such as have existed in recent weeks. At Waseca, the
average daily air temperature in late September was near 70 degrees, which is about 10 degrees above normal.
If favorable drying weather continues in the coming weeks, it is likely that corn drying costs in many areas will
be greatly reduced in 2023. The moisture content on much of the corn being harvested in many areas has
dropped considerably during the last half of September and is now 25 percent or lower.

It is a bit early to project 2023 corn yields across the Midwest; however, early indications are that corn yields in
many areas will just as variable as the soybean yields. In portions of the upper Midwest that had timely and
adequate rainfall during the growing season, 2023 corn yields may end up average or slightly above average.
However, in those areas that missed the timely rainfalls, corn yields will likely be reduced, with yields well
below APH levels in the areas that were impacted by drought conditions in 2023. Based on the September 12
USDA Crop Report, the projected 2023 average corn yields (Bu/A.) were projected in Illinois (198), Iowa
(200), Minnesota (180), Indiana (174), Ohio (195), Nebraska (177), South Dakota (146), Wisconsin (165) and
North Dakota (138). Some projected corn yields are up from a year ago, while other yields are expected to
decline.

USDA GRAIN STOCKS REPORT DECREASES CORN SUPPLY

The September 29 USDA Grain Stocks Report surprised most grain marketing analysts, being somewhat
“bullish” for future corn markets and basically “bearish” for soybean markets. Grain stock estimates for corn
were 5 percent lower than pre-report estimates by grain traders, while soybean and wheat stocks were higher
than the anticipated grain-trade projections. Following the release of the USDA report, December corn futures
on the Chicago Board of Trade (CBOT) decreased by 12 cents per bushel, November soybean futures declined
by 25 cents per bushel, and December wheat futures declined by 37 cents per bushel.

The biggest surprise in the Grain Stocks Report on September 29 was the estimated total U.S. corn stocks at
1.361 billion bushels, which was 72 million bushels lower that the pre-report estimates. The 2023 projected
corn stocks on September 1 are close to the estimated corn stocks of 1.377 billion bushels a year ago. USDA
estimated that 605 million bushels of corn was stored on farms as of 9-01-23, which is up 96 million bushels
from a year ago; however, it represents only 45 percent of the total corn stocks. This probably helps to explain
the tighter corn basis levels that existed until late September at local grain elevators and processing plants in
many locations.

The latest report implies total corn usage for feed, ethanol, exports, etc., from July 1 to September 30 this year
at 2.75 billion bushels, which is down 220 million bushels from a year ago. In addition, USDA adjusted the
final 2022 U.S. corn production totals downward by 15 million bushels from previous estimates, based on
reductions the final 2022 U.S. average corn yield. The CBOT December corn futures closing price on 9-29-23
was $4.76 per bushel, compared to September 30 CBOT corn prices of $6.17 in 2022, $5.37 in 2021, $3.79 in
2020, $3.88 in 2019, and $3.56 in 2018.

The USDA soybean stocks estimate of 268 million bushels as of September 1 was about 10 percent above the
average grain trade estimate of 244 million bushels and was near the highest estimates of marketing analysts.
The soybean stocks estimate on 9-01-23 compares to the U.S. soybean inventory of 274 million bushels a year
ago on September 1. Soybean stocks remain at fairly tight levels compared to the years prior to 2021. It was
estimated that only 72 million bushels of soybeans were stored on farms as of 9-01-23, which represented
approximately 27 percent of the total stocks. This again helps explain the strong basis level for “old crop” cash
soybean prices that existed at many grain elevators and processing plants until late September.

The biggest reason for the higher soybean stocks in the latest USDA report was a 24 percent decline in the
projected soybean usage for processing, exports, etc., from June 1 to August 31 in 2023, compared to a year
earlier. The estimated soybean usage during that period was 528 million bushels, which compares to a soybean
usage level of 858 million bushels during that same period as recently as 2020. The CBOT November soybean
futures price closed at $12.75 per bushel on 9-29-23, compared to late September soybean prices of $13.66 in
2022, $12.56 in 2021, $10.23 in 2020, $9.06 in 2019, and $8.45 in 2018.

The USDA Grain Stocks Report listed total U.S. wheat stocks at 1.78 billion bushels on 9-01-23, which is
nearly the same as a year ago on September 1. The biggest surprise for wheat was the estimated 2023 total
wheat production, which came in at 1.81 billion bushels, which was 5 percent above grain-trade estimates and
10 percent above the 2022 wheat production total of 1.65 billion bushels. The spring wheat production estimate
increased by 55 million bushels above the July estimate earlier this year. Both CBOT wheat futures prices and
local wheat prices have declined somewhat compared to the past couple of years, due to increased supply levels
and reduced wheat demand, especially for export markets.

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Note --- For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President,
MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960)
E-mail --- [email protected]) Web Site --- http://www.minnstarbank.com/