WASHINGTON, August 10, 2017 - Corn and soybean farmers hoping for a bullish crop report today had their hopes dashed by new predictions of strong soybean and corn yields that sent futures prices tumbling on the Chicago Board of Trade.
“This is a pretty big shock to the market,” said John Newton, the director for market intelligence at the American Farm Bureau Federation.
Market watchers were generally expecting the new forecasts in USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report to push yield estimates down for both crops, Newton said, but it was the exact opposite.
The new USDA report – the first survey-based forecasts for this year’s corn, soybeans, wheat and cotton – is predicting the average corn yield at 169.5 bushels per acre. That slightly below the August prediction, but up sharply from market expectations of about 166 bushels, Newton said.
“We’re right on the trend line in terms of yield, but that puts us above the trade expectations,” USDA Chief Economist Rob Johansson said today about the new corn numbers.
The report pegged total corn production at 14.2 billion bushels, a 102 million bushel decrease from the July projection. If achieved, that would represent a 7 percent drop from last year, but still the third highest yield and production on record for the U.S.
The new yield forecast for soybeans this year is 49.4 bushels per acre, up from both the July prediction and market expectations which averaged about 47.5 bushels.
USDA’s National Agricultural Statistics Service interviewed more than 21,000 farmers in the largest farming states that make up 75 percent of U.S. production.
Perhaps even more startling was the new USDA forecast for yet another record year for soybean production. U.S. farmers are now forecast to produce 4.381 billion bushels of soybeans for the 2017-18 marketing year. That’s up from the 4.26-billion-bushel prediction last month and 4.307 billion bushels that farmers produced last year.
“It’s just completely bearish news across the board for corn and soybeans at a time when farm income and commodity prices are already so low,” Newton told Agri-Pulse.
The reports sent commodity prices in a tailspin. September corn finished the day 15 cents lower; September soybeans dropped 32 cents.
Thursday’s reports also projected a 20 percent increase in cotton production from last year and a one percent decrease in wheat production from July estimates.
This month’s WASDE is based on pre-Aug. 1 data, so the situation could still change, according to a Farm Bureau analysis released today.
“With the 2017/18 crop still in the ground, a significant amount of uncertainty remains,” the AFBF report stressed. “Given that many fields are far from maturity, these yields and production numbers are subject to revision in the coming months.”
USDA’s Johansson agreed, saying: “We still have a month of weather to push the soybean numbers around a little bit.”
For now, though, the situation is grim.
“There’s still a lot of uncertainty left, but I certainly think that a lot of folks were hoping to see yields come down a little bit and provide an opportunity to lock in some more favorable prices for some of that new crop,” Newton said. “That’s certainly not the case after today’s report.”
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