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USDA Pushes Corn, Soybean Yield Estimates Higher

Markets react to separate talk of expected U.S., China tariff talks.

DES MOINES, Iowa -- On Wednesday the USDA has raised the U.S. crop sizes, while ending stocks build for soybeans.

At the close, the CME Group’s December corn futures finished 14¼¢ lower at $3.52¾. March futures closed 13¼¢ lower at $3.65.

Nov soybean futures ended 8¼¢ higher at $8.40. January soybean futures closed 8¢ higher at $8.53½.

December wheat futures finished 12¢ lower at $5.06.

December soymeal futures closed $2.20 per short ton higher at $318.40. December soy oil futures settled 0.09¢ lower at 27.99¢ a pound. 

In the outside markets, the NYMEX crude oil market is $1.05 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 49 points higher.

On Wednedsday, anonymous Trump administration sources told newswire reporters that U.S. officials have requested another meeting with Chinese officials regarding the soybean trade tariffs.

U.S. Yields

In its September Supply/Demand Reports, USDA pegged the U.S. corn 2018 yield at 181.3 bushels per acre, vs. the average trade estimate of 177.8 bushels per acre and the USDA’s August number at 178.4 bushels per acre. This yield, if realized, would produce a corn crop of 14.827 billion bushels.

The soybean yield is pegged at 52.8 bushels per acre vs. the average trade estimate of 52.2 bushels per acre and the USDA’s August estimate of 51.6 bushels per acre. This equates to a production total of 4.3 billion bushels.

U.S. Average Yield 2018 (bushels per acre)

USDA Avg. Trade Est. August
Corn 181.3 177.8 178.4
Soybeans 52.8 52.2 51.6

U.S. Ending Stocks 2017/18

The USDA pegged the U.S. old-crop corn ending stocks at 2.002 billion bushels vs. the avg. trade estimate of 2.02 billion and the USDA’s August estimate of 2.02 billion bushels.

For soybeans, the old-crop ending stocks are estimated at 395 million bushels vs. the avg. trade estimate of 426 million bushels.

U.S. Ending Stocks 2018/19

The USDA pegged the new-crop corn at 1.77 billion bushels per acre vs. average trade estimate of 1.63 billion bushels.

For soybeans, the new-crop estimate is at 845 million bushels vs. the average trade estimate of 830 million bushels and the USDA’s August estimate of 785 million bushels.

For wheat, the USDA pegged the new-crop ending stocks at 935 million bushels vs. the average trade estimate of 941 million bushels and the USDA’s August estimate of 935 million.

Trade Reactions

Mike North, president of Commodity Risk Management Group, says that today’s report discussion is dominated by corn. 

“The average trade guess expected yield to fall to 177.8 bpa. This is obviously less than the August report estimate of 178.4 bpa. Even at the highest guess of 180 bpa, analysts fell well short of the 181.3 bpa that the USDA now estimates the U.S. crop to be,” North says.

North adds, “The market bulls were caught and markets sliced a dime off corn values immediately.”

Regarding soybeans, the market took the opposite path. 

“The average trade guess was 52.2 bpa with guesses reaching as high as 53.8 bpa. The USDA raised its new estimate to 52.8, far closer to estimates than that of corn.” 

World balance sheets rose in harmony with U.S. adjustments. While ending stocks estimates climbed to 845 million bushels, the news of new rounds of negotiations with China interrupted the lower trade to move bean values higher, North says.

Sal Gilbertie, Teucrium Trading owner, says that corn prices tested their July lows, in reaction to the record-large and unexpectedly high U.S. corn yields.

“The month-on-month changes in corn yields and production clearly took the markets by surprise, but anything can happen during harvest season, which means after today’s volatility, the markets may adjust to the reality of lower year-on-year domestic corn stock levels and higher year-over-year domestic corn usage,” Gilbertie says.

Gilbert adds, “This report highlights both the dramatic change in supply and production estimates from last month and the continued fact that global grain usage is rising and global grain stock levels are falling.”

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the corn production is the big shocker today.

“Corn production and yields are way up there, and everyone was leaning the other way. The corn’s market reaction has been big. Lots of people on the sell side covering and maybe some people testing the long side. But it was bearish, and we will be lower today,” Scoville says.  

Scoville adds, “Demand increased all categories and that kept the ending stocks palatible, and average farm price not dropping much, so most of the negative reaction is probably in. For soybeans, it’s another story.

“Everyone is bearish and the USDA released a neutral number. A relief rally, plus maybe Washington and China talking again about tariffs will help hold this market.”  

However, the soybean ending stocks are still huge, Scoville says.  

“Regarding wheat, no one understands why USDA keeps the world estimates so high, but they do. So, wheat prices are dropping – again.”

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