Analysts expect friendly USDA report
What is the USDA going to say in its August Crop Production and Supply/Demand report, and what are the real numbers? These are the two questions being asked by analysts.
On Friday, the USDA will use data from counting actual ears of corn and soybean plants to estimate the size of this year's crop.
The pre-report estimates for the Friday U.S. corn yield range from 148-154.5 bushels per acre with the average at 151, slightly higher than USDA's July estimate of 150.3 bushels per acre. The average corn production estimate is 12.886 billion bushels vs. 12.840 billion from the USDA in July.
For soybeans, the average of analystsâ€™ estimates range from 2.550 billion bushels to 2.722 billion. If realized, the average yield would be 41.9 bushels per acre. The USDA's latest estimate for soybeans 2.625 billion bushels using a trend-line yield of 41.5.
Al Kluis, Kluis Commodities, projects the USDA will increase its corn yield estimate to 152 bushels per acre. "The current reality is that number is more like 149," Kluis said.
This is also the first USDA report that factors in the use of distillers dried grains (DDG's) for feed use.
"Because there is no precedent a USDA estimate of DDG's has on feed-usage, it will be interesting to watch this number," Kluis said. Factor in the idea that higher wheat prices are forcing more corn being used for feed and you have a lot of cross-currents in grain usage."
Meanwhile, Noel Blue, a CBOT floor trader and broker, said if USDA's estimates hover around the analystsâ€™, the report could be taken as bullish.
"We obviously don't know what the report will reveal tomorrow, but a flurry of upside call buying and related strategies for decent volume this week indicates to me that funds and commercials are expecting bullish data for the soy. And if the figures come in line with expectations, we should be able to continue higher," Blue said in a daily newsletter.
Despite heavy rains in the last ten days for much of the Corn Belt, the USDA's report may not include recent crop deterioration, Kluis said.
Dry weather persists in southern Illinois, southern Missouri, and the northern part of the Delta.
From a production standpoint, about 25% of the U.S. corn-producing area has been hit by drier weather, Kluis said. "This is going to make pegging a trendline yield difficult."
Other categories of the USDA report the trade will be focusing on include the U.S. soybean crush figure and the soybean ending stocks estimate.
"I think the current USDA estimates on crush and soybean exports are too low," Kluis said.
Overall, Kluis sees the USDA releasing mild-to-bullish data for Friday's market trading.
"I don't see the market trading this report very long. We'll quickly turn our attention to crop weather."
USDA is scheduled to release its August crop production and supply and demand reports Friday at 8:30 a.m. EDT