This month’s round of Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports shocked the markets and sent corn and soybean prices into the red.
Following the reports’ release, December corn prices dropped around a dime and November soybeans dropped around 17 cents.
For the Sept. 12 reports, USDA forecast corn production at 14.2 billion bushels, down 6% from last year, and the national average corn yield at 169.9 bushels per acre, up 0.4 bushels from the August forecast. If realized, this will be the third highest yield and production on record for the U.S.
Soybean production is forecast at a record 4.43 billion bushels, up 1% from August and up 3% from 2016. The national average soybean yield is pegged at 49.9 bushels per acre, up 0.5 bushel from last month.
For this report, Jerry Gulke, president of the Gulke Group, says the takeaway is not so much about what was said but what was not said.
“They did not lower corn and soybean yields—most people expected they should,” Gulke says. “This is another disappointing situation and certainly not what many of the people were looking for.”
Based on the latest USDA forecasts and market reaction, Gulke says farmers should expect a similar grain price pattern as 2016 and early 2017 for the remainder of 2017 and into early 2018.
“This creates no urgency for buyers,” he says. “It is going to be very difficult to quantify better demand because it will come very slowly. We better hope the optimistic outlooks for Chinese demand pans out because we’re going to need all the demand we can get now.”
USDA projects a range of $2.80 to $3.60 per bushel for the season-average corn price range received by producers. For soybeans, the 2017/18 range is $8.35 to $10.05 per bushel. Price forecasts for both crops were lowered around a dime in the Sept. 12 report.
A sliver of hope is that this report didn’t send prices limit down, Gulke says. Since the report was issued on Tuesday, prices could rebound during the remainder of the week. He’ll have full analysis this weekend to see how the markets close for the week.