Analyst: USDA "Gave a Gift" With Record Usage Numbers

November 14, 2016 03:09 PM

In August, the USDA predicted corn yields would hit a record high 175.1 bushels per acre, causing panic for farmers. In the September and October crop production reports, the agency lowered the corn yield, and farmers held their breaths, wanting lower yields to push prices higher. When the agency released its November report, the corn yield increased to 175.3 bushels per acre.

“If anything, this increase in yield more or less confirms there is a good crop out in the field,” said Jarod Creed of Gavilon on U.S. Farm Report. “Now we have a pretty dang good chance of having a record yield.”

On the other hand, soybean yields started at 48.9 bushels per acre and surged to 52.5 bushels per acre. Farmers are wondering if these consistent yield increases will catapult into still higher yields in December and January. Ted Seifred of Zaner said it’s “very rare” for the USDA to do much in December because that’s when they’re collecting data.

“We really will have that data compiled by the time we get to January, and then more so in February,” said Seifred. “It’s setting us up for a potential for a slightly higher soybean yield. The Band-Aid was ripped off on this November report.”

If the corn yield is lowered, Creed said Iowa, Minnesota, and Illinois will all have to see lowered yields for the numbers to have a significant change. With the increased supply, according to Creed, stocks are increasing as well. He also stressed how important it is to hit the USDA’s numbers.

“We got to get out there and meet the demand that USDA has already forecasted,” said Creed. “If we don’t, we’re really talking a little bit different about prices moving forward.”

Watch Creed and Seifred discuss the changing demand story for soybean and the South American crop situation on U.S. Farm Report above.

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