Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.
Corn and Soybean Yield June to July WASDE:
Jul 09, 2009
Allendale Inc’s research found two previous years when the percentage slow rate of silking was near the 2009 level of 8% as we approach the July World Agriculture Supply Demand Estimate report. What we are trying to ascertain is what are the prospects could make a yield adjustment to the nations corn crop from the June to WASDE report based on present crop progress first and then give a degree of weight to the crop conditions for a crop that is behind in its growth progress (16% five year average for silking).
The two years identified with similar progress were 2003 and most recently 2008. As you are able to view via the chart is how in 2008 the % silking was 6 and the good to excellent crop condition was rated 9% less than present levels of 71%. USDA chose to reduce the nation’s June to July 2008 corn yield by half a bushel per acre. If USDA were to follow through with a similar yield reduction in its July 10th 2009 report, production would drop from the present 12.288 billion bushel to 12.248 bil bu. Equally important 2009/10 end stocks would drop from Allendale Inc’s present estimate of 1.354 billion bu (11% end stocks to use) to a level of 1.313 billion bushel (10.5% end stocks to use).
In 2003 the percent silk was 9 and crop ratings were 73% good to excellent and very much likely the reason why USDA decided to increase the yield from June to July report by 3 bushels per acre. If USDA were to follow a similar pattern in 2009, the nation’s corn yield would increase to a level of 12.529 billion bushels and end stocks increase to 1.594 billion bushels (12.7% end stocks to use).
With regards to soybeans the adjustment is much less likely even though the 2009 progress (% blooming) remains more than half of its five year average of 30%. At the present 14% bloom Allendale Inc identified two years which had similar rates and they are 2008 and 2003. As you are able to view the 2008 soybean crop has 12% of the crop blooming and was rated 59% good to excellent vs the present 2009 66% good to excellent. One year ago USDA did drop the soybean yield from June to July by a half a bushel per acre. If USDA were to follow a similar pattern in Friday’s report total production would drop from 3.261 billion bushels to a level of 3.223 bil bu and end stocks to a level of 239 billion bushels with an end stocks to use level of 8% vs 2008’s level of 4%. Even though the percent bloom in 2003 was less at 11 and good to excellent crop ratings were 70%, USDA made no revision to yield from June to July.
In conclusion, if there is to be a yield adjustment in the July 10th WASDE report, Allendale Inc would suggest USDA may be more likely to increase corn rather than leave yield unchanged or decrease or make any adjustment to the soybean yield. In this case Allendale Inc would suggest the July WASDE to provide production data which would provide more pressure than lift to corn futures.
What are your thoughts will USDA make any change to corn and or soybean yields in the July WASDE or leave them status quo?.........Joe Victor
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