Feed Grains

Industry drivers

Northwest corn production increases 

Most of the corn grown in the Northwest is used for local feed. Last year, elevated nitrogen fertilizer prices, water concerns and a multitude of competing, profitable crops reduced Northwest planted corn acres. This year, expensive feed was a major concern for livestock producers. To combat these worries, an additional 75,000 corn acres were planted in the Northwest (up 11.3% year over year). Idaho’s planted feed acres increased to 355,000 acres, up 35,000 acres from 2022. Despite the USDA forecasting a 3.7% decrease in yield, Idaho’s corn production is predicted to increase 4.9% year over year. In southwest Idaho, cool spring temperatures stunted development leaving corn with underdeveloped kernels. Washington producers planted 25,000 additional acres and production increased by 16.6%.  However, some areas in western Washington are short on feed corn due to fields drying early. In Oregon, corn silage harvest ramped up in late September, but final production estimates are not yet known. Ultimately, more corn production will help relieve pressure on dairies by increasing options for affordable feed alternatives.  

Corn production up 10.2% from 2022

The USDA has cut back on their corn production estimates due to dry weather impacts on the new crop. In September the USDA lowered the corn yield estimates to 173.8 bushels per acre, a 1.3 bushel reduction in one month. Yields in Minnesota, Wisconsin, Illinois and Missouri have declined due to ongoing drought and many analysts expect further reductions are possible throughout harvest. Despite forecasted declines, the national corn yield is still expected to be higher than in 2022.  Corn producers are expected to harvest 87.1 million acres, a 10% increase from last season. The combination of stable yields and higher harvested acres will increase national corn production. 

U.S. Corn Yields (in million bushels) and percentage change year over year

Source: USDA Crop Production. Sept. 12, 2023. 

The USDA average farm price for the new corn crop is $4.90 per bushel, down $1.65 per bushel from 2022. New crop corn futures have traded steadily at the $4.70- $4.80 range since mid-September. The USDA Quarterly Grain Stocks report was bullish, with a 15-million-bushel reduction in corn stocks (down 6.3% from USDA’s Sept 12 WASDE estimate). Despite the lower-than-expected corn stocks, futures prices decreased likely due to underestimating soybean and spring wheat stocks (which experienced more significant price declines following the report). Lower corn prices are a welcome relief for dairies that have been struggling with high feed costs.

Soybean production hindered by dry heat in the Midwest

U.S. soybean harvest is underway with only 50% of the soybean crop in good or excellent condition. Unfortunately, this is the worst crop condition rating since 2013. The USDA estimates the 2023 crop to be 4.14 billion bushels, down 3.0% year over year. Ending stocks declined year over year due to lower beginning stocks, yields and production. This cut to soybean production will put pressure on domestic supplies with total end stocks likely to reach the lowest levels in eight years.

U.S. soybean production declined due to fewer harvested acres in key states that chose to plant more corn acres. Extreme summer heat impacting most of the Midwest during the pivotal development stage took a toll on the soybean crop, and the USDA reduced yield projections. Soybean production is forecasted down 3.0% year over year. 

U.S. Soybean Production* (in million bushels) and percentage change year over year

Source: USDA Crop Production. Sept. 12, 2023, compiled by AgWest.
*Selected 18 states account for 96% of soybean production in 2022.

Slow start to soybean harvest boosts new crop prices

Soybean prices are softening. The USDA forecasts the 2023 crop average price at $12.90 per bushel, $1.30 per bushel lower than 2022 prices. November soybean future prices fell at the start of September as harvest neared, dropping from $14.00 per bushel to $12.85 in three weeks. With a slower-than-expected harvest, prices increased and November futures rose to nearly $13.00 per bushel before plummeting to $12.75 per bushel on September 29 after larger-than-expected soybean stocks. Prices have been very responsive to harvest conditions and changes to the soybean crop will be reflected in prices. 

Mississippi River limits barges

Drought is causing the Mississippi River water levels to drop to near-record lows (9.5 feet below the floodgate level), which is disrupting barge traffic and increasing shipping costs for grain farmers. This is the second year in a row that the drought has affected the river, and there is no significant rain in the forecast. About 60% of U.S. grain exports are shipped by barge along the Mississippi River. This is typically an inexpensive and efficient way to transport crops, but lower water levels are forcing barge companies to load less into each vessel and string fewer barges together. This has increased the cargo rate and hurt grain farmers who have few options for transporting products to export markets. 

Barge movement on the Mississippi River

Source: U.S. Army Corps of Engineers.