The October Crop Production report is probably the most important of the year, says Dan Basse of AgResource in Chicago. “In this report, USDA has the ability to measure actual harvested yields from their plots rather than relying on farmer surveys. Past history shows a very close correlation between the October and the final reported yields.”
This year, that’s especially true: “A lot of clients tell us this is the best looking, poorest yielding corn crop they have ever seen,” says Basse.
“The trade focus is that even with the larger than expected stocks reported last Friday, any corn yield below the 158 to 159 range will shift the market into a rationing mode, meaning prices in the $5.50 to $6 area,” says Basse. If yields are over 160, on the other hand, he says, “Maybe we’ll trade in a wide range into the end of the year.”
In addition, Farm Service Agency data will be used to figure any change in acreage from the June report.
If the crop is down in this report, history says it will drop yet again in the November and January reports.
Other important numbers to watch in this report are the winter wheat crop in Russia and Latin American crops, where the U.S. Ag Attaché reports they are improving.