For the second month in a row, USDA surprised the market with higher than expected yield estimates for corn and soybeans.
In its World Agriculture Supply and Demand Estimates released today, USDA predicted an average corn yield of 167.5 bu. per acre for corn and 47.1 bu. for soybeans, both of which surpassed the average trade guess (165.0 bu. for corn and 45.7 bu. soybeans, according to Water Street Solutions).
“Last month, they were at 46.9. They actually raised it up to 47.1,” said Rich Nelson of Allendale after the report. “That’s a very strong yield number.”
It caught the market off-guard. “That was above what the trade was looking for,” said Brian Basting of Advance Trading, speaking on a post-report MGEX conference call. “The market was a bit surprised.”
Like others, Basting is already looking ahead to the October report for more information and ideally, more certainty, about this year’s roller-coaster soybean crop. “Between now and October 9, we’ll let the combines—if you will—tell the story, weather permitting,” he said.
The corn numbers were also a bit unexpected. While the market did expect USDA to reduce its September yield estimate from August’s 168.8 bu., which it did, USDA left that figure higher than the trade projected, given widespread concerns about nitrogen loss and washed-out fields.
Just this week, satellite photos by Descartes Labs suggested U.S. corn farmers will only harvest 13.3 billion bushels, which is below USDA’s latest production estimate of 13.6 billion bushels.
“USDA did trim its initial corn yield, but (167.5) would still be the highest yield ever,” Basting said.
Where does he see corn yields ending up? It’s tough to say, given the dramatically different crop conditions that can be seen in Minnesota compared to Indiana this year. “I’m unwilling to go too far out on a limb, given the diversity of the crop,” he said.
The overall reduction in corn production pushed prices up on Friday, with September ’15, December ’15 and March ’16 futures jumping more than 12 cents.
What did you think of today’s USDA numbers? Could average corn yield reach 167.5 bu.? Could soybeans hit an average of 47.1 bu. per acre? Let us know in the comments.