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USDA Drops U.S. Corn Yield Slightly, Markets Drop

Soybean prices plunged 33¢, off of a higher yield estmate.

DES MOINES, Iowa — The U.S. corn crop is getting smaller, while the soybean crop gets bigger, according to the USDA.

In its August Supply/Demand Report Thursday, the USDA pegged the 2017 U.S. corn yield at 169.5 bushels per acre vs. the USDA’s July estimate of 170.7 and the average trade estimate of 166.2 bushels per acre.

For soybeans, the USDA’s U.S. yield is estimated at 49.4 bushels per acre vs. the trendline forecast of 48.0 and the average trade estimate of 47.5 bushels per acre.

As a result, the CME Group futures markets have dropped.

At the close, the September corn futures finished 15¢ lower at $3.57¼, while December futures closed 15¼¢ lower at $3.71.

September soybean futures closed 32¢ lower at $9.34, November soybean futures settled 33¢ lower at $9.40¼.

September wheat futures finished 19¢ lower at $4.40.

December soy meal futures ended $12.70 per short ton lower at $300.20. December soy oil futures settled at 0.37¢ lower at 34.16¢ per pound. 

In the outside markets, the Brent crude oil market is $0.97 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 124 points lower.

The U.S. 2017 corn production estimate is 14.15 billion bushels vs. the previous USDA estimate of 14.25 bushels per acre and the average trade estimate of 13.85 billion bushels.

For soybeans, the USDA pegged the 2017 production at 4.38 billion bushels vs. the USDA’s July estimate of 4.26 billion and the average trade estimate of 4.212 billion.

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U.S. Ending Stocks

In its report, the USDA pegged the U.S. 2016-17 corn ending stocks at 2.37 billion bushels vs. the USDA July estimate of 2.37 billion bushels and the average estimate of 2.386 billion.

For 2017-18, the U.S. corn ending stocks is estimated at 2.27 billion bushels, compared with its July estimate of 2.32 billion bushels and the average trade estimate of 2.00 billion.

The USDA pegged old-crop soybean ending stocks at 370 million bushels, vs. the USDA’s July estimate of 410 million bushels and the average trade estimate of 401 million.

For 2017-18 soybean ending stocks, the USDA sees U.S. stocks at 475 million bushels vs. the July estimate of 460 million and the average trade estimate odf 424 million bushels.

Trade Reaction

Sal Gilbertie, Teucrium Trading founder, says that the end-users seem to have caught a break with this report, with official estimates of higher per-acre yields for both corn and soybeans than were expected.
 
“New record-high global inventories for wheat are also a bit of a surprise but are more than welcome given the drought in the Dakotas and near-record world demand,” Gilbertie says.
 
He adds, “Also, corn supplies are falling faster than use in the U.S., which says that even though farmers are projected to harvest the second largest U.S. corn crop in history, we will still draw down our ending stocks due to steady and high demand for corn.”

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the report’s yields are very high and imply much better crops than what I saw last weekend in central Illinois.  

“These estimates are way too high and a borderline bad joke. But we will see. Central Illinois has a lot of soybeans fields, but bean plants are small this year. Corn and beans very uneven.”

Brian A. Rydlund, CHS Hedging’s market analyst, says that the USDA’s soybean yield shocker was huge.

“No one saw that coming. Since August 1, my guess is that the crop has gotten bigger in most areas based on weather,” Rydlund says. The trade went into this report thinking it was going to be a friendly report               and got a surprise.”

Rydlund adds, “With these yields, row-crop carryouts grow U.S. corn carryout for 2017/18 remains over 2 billion bushels. And that doesn’t equate to a $4 futures market.”

For soybeans, the U.S. 17/18 soy carryout goes to 475 million bushels. “That is not a $10 futures market,” Rydlund says.         

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