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The September Report is coming
The Sept. USDA report is coming on Monday, and many are asking whether or not it will contain any surprises like the last report.
Traders will be watching for shockingly low soybean production numbers, and a significant decline in corn yields of over 5 bu/acre. Based on yield models at the time, the huge drop in corn and soybean yields was unfounded, but the heat recorded during July for the US was enough to make USDA drop significantly both yield numbers.
Now, as the Sept. report rolls along, typically it follows that the
direction of the Sept. report yields are along the same lines as August,
i.e. another drop in production is anticipated. Some private estimates
are as low as 140 bu/acre corn and 40 bu/acre soybeans, as it seems these private estimates have competed to see who could drop the yields the most.
But yet, the yield models based on crop conditions continue to suggest a yield higher than any private estimates, at 156 bu/acre corn and 43
bu/acre soybeans. While the yield model numbers show a decline from August 1 of about 0.5 bu/acre soybeans and 2 bu/acre corn, these numbers are still well above the current USDA projections of 153 bu/acre corn and 41.4 bu/acre soybeans.
Private estimates have weighed in, with the Pro Farmer tour finding a
decline in corn yield potential with their estimate at 147.9 bu/acre, and
their soybean estimate showing a hike of 0.4 bu/acre to 41.8 bu/acre.
Similar numbers have come out of the respected Informa camp, with corn at 151 bu/acre and soybeans at 41.5 bu/acre. Both suggest a corn decline, but a slight hike in soybean yields as it appears USDA might have 'jumped the gun' on soybean yield declines in the August report.
Yet, it remains that August was a drier than normal month for much of the country, but actually a cool month for much of the Corn Belt (especially the central and eastern Corn Belt). Did August do as much crop damage as the warm month of July did? Or, did most of our yield decline in the 2011 potential crop size occur in July?
These are some questions that USDA should answer in their Sept. report.
It must be noted that typically harvest results can vary as much as 6-12
bu/acre from expectations in corn, and 1.5-3 bu/acre variations in
soybean yields from what is 'expected' to what actually ends up in the
combine hopper. We won't know any harvest results, however, until we actually get into the October report. But preliminary analysis has
indicated that early crops are yielding better than expected, especially
early planted corn in ILL/IND.
One thing is certain: Crop maturity is not the major concern it was
earlier this year, when worries of frost damage were rampant due to the late start to planting in many states. Actually, crop progress reports are indicating that crop development has 'caught up' to normal crop development in terms of maturity, and already we are into Sept. with no real frost threat on the horizon. That means that northern crops such as the corn/soybean in the northern Plains are getting close to being insulated from significant crop damage from frost. Already, some of the corn has reached dent stage in the northern Corn Belt states of ND and MN, with WI and MI also moving along in crop development to near normal stages of development. This could be significant, as these states should have the best crop yields in 2011 due to adequate moisture most of the year, and they got the heat needed to reach maturity of the crop. Since these are northern most corn belt states, they also thrive on warmer than normal years, and it might be surprising how good the production is in these areas.
So, get ready for some interesting news on Monday with the USDA Sept. report, and we'll see if USDA can bring any more surprises. It seems everyone is expecting a very bullish report, so perhaps we might be surprised by only a mildly bullish report?
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