The August round of Crop Production and World Agricultural Supply and Demand Estimates (WASDE) caused many heads to spin and grain prices to sink. Jerry Gulke, president of the Gulke Group, called them a headscratcher and left the markets with plenty of shock and awe.
USDA forecast corn production at 14.2 billion bushels, down 7% from last year, and the national average corn yield at 169.5 bushels per acre, down 5.1 bushels from 2016. The projected range for the season-average corn price is $2.90 to $3.70 per bushel.
For soybeans, USDA raised the national average yield to 49.4 bushels per acre, which is down 2.7 bushels from last year. But due to higher acres, U.S. farmers are expected to produce a record-high soybean crop this year. Up 2% from 2016, soybean production is forecast at 4.38 billion bushels. The U.S. season-average soybean price for 2017/18 is forecast at $8.45 to $10.15 per bushel.
“The reports surprised me and surprised a lot of people,” Gulke says. “It seemed like the end of the world was coming on Thursday.”
Yet, the week ended with just modest declines in corn and soybean prices, compared to the dramatic drops following the reports’ release.
“Fortunately we had a few strong days coming into the report,” Gulke says. “Soybeans were down 35 cents on Thursday, but are down only 11 cents for the week.”
Overall, he says, prices are staying within a trading range.
“It was a bad report, but the week could have been a lot worse,” Gulke says. “We’ve reset some things.”
For the August Crop Production report, NASS interviewed more than 21,000 producers across the country and conducted field and lab measurements on corn, soybeans, wheat and cotton in the major producing states, which usually account for about 75 percent of the U.S. production.
The next large sampling of in-field data will occur during the Farm Journal Crop Tour, hosted by Pro Farmer, which takes place Aug. 21-24. Gulke says this year’s results will be even more important than years’ past.
“If USDA is implying too much of a good thing and Pro Farmer comes in and says something different, the market will have to figure out how to trade that information,” he says. “It will be exciting when it gets all done.”