Market expert Bob Utterback tells you what you need to know heading into tomorrow’s report.
All eyes will be on yield estimates tomorrow morning, as USDA issues its August Crop Production and World Supply and Demand Estimates (WASDE).
USDA’s current average U.S. corn yield estimate is 146 bu./acre, yet many ag market experts expect USDA to significantly drop that estimate.
How low will USDA go? According to more than 2,300 votes on the current AgWeb poll, most people think it will fall into the 120 – 129 bu./acre range. See the poll results.
Bob Utterback, president of Utterback Marketing and Farm Journal columnist, believes USDA will not lower estimated yields low enough to adequately reflect the crop conditions it has been reporting.
He shares his insight:
Currently, only 23% of the U.S. corn crop is rated good or excellent. Twenty-five percent is rated very poor, 25% poor and 27% fair.
Crop conditions aren’t much better for soybeans. As of this week, 4% are rated excellent, 25% good, 32% fair, 23% poor and 16% very poor.
For corn, Utterback believes the trade is expecting a 130 bu./acre corn national average. "A yield below 136 bu./acre, which would have been considered bullish two weeks ago, would now be considered bearish. I think USDA is going to have to release a yield below 130 to be considered a positive number. If it is below 127 bu./acre, it will be a bullish number."
He expects prices to explode on Friday, which could be a great opportunity for grain producers. "If you have un-priced inventory to sell for 2012, you are in the driver’s seat."
Soybeans Still a Wild Card
Utterback says he has anxiety about predicting how the soybean market will play out this fall.
"Stocks are extremely tight and a small change in yield will have a phenomenal impact on bean prices because beans are so much harder to ration."
Since South America’s planting window is nearing, Utterback says farmers there will likely have a huge incentive to plant soybeans, which will alter the market’s path. "The biggest rally potential for beans is between October and February."
Hear more thoughts from Utterback on tomorrow's reports:
Critical Eyes on Report Data
Utterback admits USDA has a difficult task ahead of it tomorrow. "USDA has already taken significant hits about their crop reporting process and how the numbers are really affecting the market adversely. There’s real pressure to get it right."
Log onto AgWeb.com tomorrow for full report data and analysis. The reports are released at 7:30 a.m. (CDT) releases, and analysis will be posted throughout the day.
For More Information
See pre-report analysis of the Aug. 10 reports.
See current market prices in AgWeb's Market Center.