This month’s round of Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports proved to be a jolt to the market—unfortunately the jolt left markets in the red.
For the Aug. 10 reports, 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.
Ahead of the report analysts were predicting a drop in the national corn yield.
“But USDA only lowered it a little bit,” says Jerry Gulke, president of the Gulke Group. “There are people who think the ultimate yield will be between 160 to 163 bu. I don’t know how they got today’s numbers, but it is what it is.”
If realized, this will be the third highest U.S. corn yield and production on record. NASS forecasts record-high yields in Alabama, Louisiana, Michigan, Mississippi, New York, Pennsylvania, and South Carolina. Yet, farmers in South Dakota, Iowa, Minnesota, and Illinois are forecast to have yields below a year ago.
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 increase in soybean yields was a “shocker,” Gulke says.
“USDA raised production 120 million bu., which is a lot,” he says. “When you have 90 million acres of soybeans and raise the yield by 1 bu., that’s a 90 million bu. increase.”
Going into the report, Gulke was predicting around a 0.5-bushel drop for soybean yields.
“Farmers are calling in telling us their crop ratings are terrible; what is USDA thinking?” he says. “My gut feeling is this is probably the best production report we’re going to see for corn and beans. They have just kicked the can down the road. Just when you thought things would get better economically for farmers, the government say: That ain’t going to happen.”
Yet, Gulke says, the markets—especially soybeans—could still close higher for the week, since prices rallied into this report. Tune in Saturday morning for Gulke’s weekly take on the grain markets.