Are you ready for the Nov. 8 Crop Production and World Agricultural Supply and Demand Estimates reports? Will they rock or rattle the markets?
Due to the government shutdown, USDA did not release its October Crop Production and WASDE reports. Its last reports, released in September, peg the national corn yield average at 155.3 bu./acre. For soybeans, USDA’s yield estimate is 41.2 bu./acre.
USDA will have an opportunity to revise these estimates, as well as others, when it releases its Nov. 8 reports at 11 a.m. CDT.
What information in these reports could shock the markets? Four market experts share their thoughts on the possible surprises.
1. Bullish Tone
Farmers and traders are headed in to tomorrow’s reports expecting an overall negative tone. According to AgWeb’s current poll, 70% of the nearly 400 respondents are expecting the general theme to be bearish for the ag markets.
Kevin Van Trump, president of Farm Direction, says most in the trade are looking for bearish production numbers for both corn and soybeans. "With everyone leaning over the bearish side of the boat, any bullish type number would quickly throw a few of the bears overboard," he says.
"My hunch is both corn and beans could quickly bounce back higher on the initial knee-jerk reaction to the downside," Van Trump says. He says demand for both corn and soybeans are starting to gain momentum.
2. A Really High Corn Yield
Dustin Johnson, a broker with EHedger, says he thinks the biggest surprise could be a higher corn yield. "This would be especially bearish because we don't believe the demand estimates can be increased from current levels," he says. "Any extra production should immediately add to final 2013 carryout."
Johnson notes that a recent Reuters Poll says the average analyst is guessing about 158.9 for a national corn yield and a harvested acre loss of about 1 million. "We think the yield estimate is too low considering the favorable crop ratings and harvest reports," he says. "Ultimately this could set the market up for disappointment, which may result in a bearish reaction for corn." Johnson says his group believes the average yield will be closer to 162 bu./acre.
3. Low Corn Yield
On the flipside, Tommy Grisafi, president of Indiana Grain Company, says the biggest surprise could be less corn acres and a low corn yield. "That would be a huge shocker," he says. "We would be up 30 cents tomorrow."
Yet, Grisafi is not expecting a tremendous jump from USDA in corn yields. "I’m not sure USDA has all the tools or resources to make a huge increase in yields at this point," he says. "Maybe in January, we’ll have a 162 yield. But, I’m not sure they can skip from a 155 to 162, just because every private forecaster in the world says it’s there."
4. Harvested Acres
Joseph Vaclavik, president of Standard Grain, Inc., says USDA has never really accounted for the prevent plant acres that were lost this past spring. "Acreage is the biggest wildcard in my opinion," he says. "A surprise could be seen in either direction."
Van Trump agrees. "I think the reduction in harvested acres for corn could be more substantial than some have been anticipating," he says. "The trade is looking for about a 1 million acre reduction down to 88 million. I am thinking the cut could be more like 1.5 to 2 million acres…closer to 87 million acres."
Experts Share Yield Expectations
How will USDA adjust its national average corn yield and national average soybean yield? Our four experts share their predictions:
Tommy Grisafi, Indiana Grain Company: Corn - 159 bu./acre; Soybeans – 42 bu./acre
Dustin Johnson, eHedger: Corn - 162 bu./acre; Soybeans – 43 bu./acre
Joseph Vaclavik, Standard Grain: Corn - 159 bu./acre; Soybeans – 43 bu./acre
Kevin Van Trump, Farm Direction: Corn – 159.9 bu./acre; Soybeans – 42.9 bu./acre
Other private estimates:
Allendale, Inc: Corn – 158.7 bu./acre; Soybeans – 42.4 bu./acre
Informa Economics: Corn – 161.2 bu./acre; Soybeans – 43.3 bu./acre
For More Information
See current market prices in AgWeb's Market Center
Visit AgWeb.com on Nov. 8 full coverage and analysis of the USDA reports following their 11 a.m. release. Read AgWeb's pre-report coverage.