The January USDA reports are the biggest of the season with final crop production, the WASDE, quarterly stocks and winter wheat seedings for the new season. The reports have been historically a huge market mover and a great deal of the focus will be on final yields and production.
All Eyes on Corn Yield
For corn yield the trade is expecting just a 2 bu. cut to 184 bu. per acre. DuWayne Bosse, with Bolt Marketing says that is too conservative. “On corn, I’m as low as 181, and honestly, I wouldn’t be shocked if it’s below 180. So my numbers are quite a bit below the average trade guesses. I mean, there were good yields out there but man, we planted almost 100 million acres of corn. And that means it’s in fringe areas.”
Other market analysts agree corn yields are under 184 bushels and the trade guesses but they are less confident. Chip Nellinger, Blue Reef Agri-Marketing agrees the national average corn yield is under 184 bu. and the average trade guess but says he’s not confident USDA will make much of a cuts. “I think if they went down to to 182,181, certainly below 181. I think would be a big bullish shock because I don’t think there’s many people out there that believe they will do that.”
A 184 corn yield would still put production at a record 16.6 billion bushels and lower ending stocks just 57 million bu. to just under 2.0 billion bu. So corn yield cuts will need to be larger than 2 bu. to get a market reaction because it is likely to be offset by lower feed and residual according to Garrett Toay with AgTraderTalk. “You’ve you’ve got a feed residual number that’s 600 million bu. larger than this point last year. So, there’s some demand baked in there that could potentially offset production cuts.”
Soybean Changes Could Be Minimal
For soybeans the average trade guess only lowers yield by .3 bu. to 52.7 bu. per acre. But Bosse again thinks a bigger cut is warranted.
“I felt like the hot, dry finish, and, you know, again, we combined beans that were a lot of 8% and 9%, instead of 13%. We learned a year ago that does reduce the yield quite a bit.”
But the conservative yield cut estimate puts production at 4.23 billion bu. and ending stocks at 292 million nearly unchanged from December. That would require USDA to leave demand nearly unchanged, even though export sales are still nearly 30% behind last year. Nellinger says that may not be realistic but he’s not sure about USDA lowering exports further.
“In the case of the exports, I don’t know if we’re deep enough into the season yet for them to come off of, first base, so to speak. So hopefully they don’t, because if they do and they don’t do much as far as a yield cut, that really could be kind of a bearish signal for the bean market.”
USDA Releases Quarterly Stocks
USDA also releases quarterly stocks Monday with estimates of 12.962 billion bu. on corn, up nearly 900 million bu. from last year. Soybeans at 3.3 billion bu. would be up 125million and wheat at 1.64 billion, up 64 million bu.
Winter Wheat Seedings Down
Winter wheat seedings are expected to be down 800,000 acres to 32.413 million. Hard red winter wheat acreage is pegged at 23 million acres, down 500,000 with farmers planting 5.9 million acres of soft red winter wheat, down 200,000 from a year ago. White winter wheat plantings are estimated at 3.5 million acres, down 100,000.
