USDA drops U.S. corn yields, market closes off daily highs

Soybean crop size left alone.

The U.S. corn yield falls below trade expectations, while soybean yield thoughts are left unchanged.

As a result of the bullish USDA numbers, the CME Group’s farm markets jumped up double-digits. However, with the exception of wheat, other markets trimmed gains Thursday.

At the close, the Sept. corn futures finished 10 3/4¢ higher at $5.67 1/2. New crop Dec. futures finished 14¢ higher at $5.73 1/2. March corn futures ended 12¢ higher at $5.79.

Sept. soybean futures closed unchanged at $13.47.

Nov. soybean futures settled 1¢ higher at $13.41. January soybean futures closed 1 1/2¢ higher at $13.46.

Sept. wheat futures ended 26 1/2¢ higher at $7.53.

Dec. soymeal futures settled $2.00 per short ton higher at $358.50.

Dec. soy oil futures closed $0.02 lower at 61.58¢ per pound.

In the outside markets, the NYMEX crude oil market is 0.24 lower (-0.35%) at $69.01. The U.S. dollar is higher, and the Dow Jones Industrials are 44 points lower (-0.13%) at 35,440 points.

U.S. 2021/22 CROP PRODUCTION

In its report, the USDA pegged the U.S. corn production at 14.75  billion bushels vs. the trade’s expectation of 15.0 billion and the previous estimate of 15.16 billion bushels.

The U.S. corn yield average was pegged at 174.6 bushels per acre vs. the trade’s expectation of 177 bushels per acre and the USDA’s previous estimate of 179.5.

For soybeans, the USDA pegged output at 4.33 billion bushels vs. the trade’s expectation of 4.3 billion and the government’s July estimate of 4.40.

For yield, the soybean average is pegged at 50.0 bu./acre vs. the trade’s expectation of 50.4 bu./acre and the government’s previous estimate of 50.8.

2020/2021 U.S. ENDING STOCKS

For corn, the USDA pegged the U.S. old-crop ending stocks at 1.11 billion bushels vs. the trade estimate of 1.09 billion bushels and the USDA’s July estimate of 1.08 billion.

For soybeans, the U.S. ending stocks were 160 million bushels vs. the July estimate of 135 million bushels. The trade expected the USDA to print 148 million bushels today.

2021/2022 U.S. ENDING STOCKS

For corn, the USDA pegged the U.S. new-crop ending stocks at 1.24 billion bushels vs. the trade estimate of 1.3 billion bushels and the July estimate of 1.43 billion bushels.

For soybeans, the U.S. ending stocks were 155 million bushels vs. the trade’s expectation that USDA would print 159 million bushels today. In July, the USDA’s estimate was 155 million.

In its report, the USDA pegged the U.S. wheat ending stocks at 627 million bushels vs. the trade’s expectation of 644 million and compared with the July estimate of 665 million bushels.

2020/2021 WORLD ENDING STOCKS

On Thursday, the USDA pegged the world’s corn ending stocks at 280.8 million metric tons (mmt.) vs. the trade’s expectation of 278.0 mmt. and the USDA’s July estimate of 279.8 mmt.

For soybeans, the world ending stocks are estimated at 92.8 mmt. vs. the trade’s expectation of 91.0 mmt. and the USDA’s July estimate of 91.4 mmt.

For wheat, the USDA pegged world ending stocks at 288.8 mmt. vs. the trade’s expectation of 290.0 mmt. and the USDA’s previous estimate of

2021/2022 WORLD ENDING STOCKS

On Thursday, the USDA pegged the world’s corn ending stocks at 284.0 mmt. vs. the trade’s expectation of 288.2 mmt. and the USDA’s July estimate of 291.1 mmt.

For soybeans, the world ending stocks are estimated at 96.2 mmt. vs. the trade’s expectation of 94.5 mmt. and the USDA’s July estimate of 94.4 mmt.

For wheat, the USDA pegged world ending stocks at 279.1 mmt. vs. the trade’s expectation of 288.4 mmt. and the USDA’s previous estimate of 291.6 mmt.

2020/2021 WORLD CROP PRODUCTION

On Thursday, the USDA pegged the 2020/2021 Brazilian soybean production at 137.0 mmt vs. the USDA’s estimate last month of 137.0 mmt.

For corn, Brazil’s output is seen at 87.0 mmt. vs. the trade’s expectation of 92.0 mmt. and the USDA’s July estimate of 93.0 mmt.

For Argentina’s soybean output, the USDA pegged its crop at 46.0 mmt. vs. the USDA’s July estimate of 46.5 mmt.

Argentina’s 2020/2021 corn crop is pegged at 48.5  mmt vs. the USDA’s previous estimate of 48.5 mmt.

TRADE REACTION

Sal Gilbertie, Teucrium Trading, say that this report was a surprise to the upside.

“The USDA gave us an unusual August surprise by lowering corn and wheat yield estimates far more than the average trade guess. Today’s report confirms what many farmers already know, that the damage done to crops in the western and upper Corn Belt is severe enough to affect nationwide average yields negatively for both corn and wheat. Balance sheets across the grain complex are getting uncomfortably tight, which means prices could stay elevated for longer than expected,” Gilbertie says.

Louise Gartner, Spectrum Commodities, says that today’s USDA report was obviously a bullish one all the way around for the grain complex.

“I didn’t expect USDA would decrease Russia’s production so aggressively to 72.5 MMT. A 12.5 MMT drop in one month is huge, and they are actually below the private estimates of around 75.0 MMT. US wheat production also lower and end stocks continue to tighten.

She added, “U.S. corn yields also saw a sharp drop in just one month of almost 5.0 bu/acre (takes it below trendline yield). Soybeans weren’t quite as bullish but still shaved off yield and production. I think this set the stage for the next leg up in all grains.”

Jason Roose, U.S. Commodities, says that in a year with tight stocks in all grains and large price swings are common, today’s USDA’s crop report was no different.

“Bullish numbers were reported in corn and wheat sending prices sharply higher , with lower yield in corn , tighter world corn ending stocks and lower U.S. ending stocks, the market has known for many months that we needed a perfect growing season to build our ending stocks. This did not happen. With a sharp drop in the corn yield, almost 5 bushels lower from July which lowered the ending stocks to 1.242 bln bushels, exports and actual harvest estimates will be closely watched for next price direction,” Roose says.

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Tags: corn, USDA, soybean, CME Group, CME Group's farm markets, crop, corn yields