USDA’s August reports came with some surprises. From a cut to the national corn yield, to the revisions in export demand, the changes fueled prices post report Thursday. Friday, while soybeans and wheat still shot higher, the corn market was more mundane, with corn prices closing nearly unchanged.
So, where do prices go from here? Does history tell us the August report typically puts the high in for commodity prices, or does it typically propel prices in the months ahead?
“First of all, the growing season is not done,” says Joe Vaclavik of Standard Grain. “I mean, you can make the argument that the corn crop is is probably about where it’s going to end up. We have an idea, but the soybean crop is still a work in progress. USDA can still change a lot of things down the road. This yield number is not set in stone. I don’t think the acreage numbers are set in stone, either.”
Vaclavik says from acreage to possible changes in yield, as combines hit the field, USDA’s crop projections will continue to get adjusted.
“I think that today’s report in itself, in a vacuum, yes, it’s friendly when you look at it on paper. And you’ve got to take it at face value,” he adds. “But USDA could go up with the yield. They could go down with the yield. There could be late season weather implications. All sorts of different things could happen. It’s mid August; t’s not mid October. We don’t know exactly what’s out there. We have a better feel for it I think after today, but we don’t know exactly what’s out there.”
Focus on Crop’s Potential During Pro Farmer Crop Tour
USDA’s August production and yield numbers were based on farmer surveys, not boots in the field results from actual samples of yields. And the questions on whether’s USDA’s cuts to corn were too deep could get additional answers during the Pro Farmer Crop Tour next week.
“I think the August report just gives us a snapshot picture right now, and the September report will be built on totally different parameters,” adds Arlan Suderman, with StoneX Group. “Yes, there will be a subjective farmer survey involved in there. But the objective field sampling will be involved and the crops will be more mature.”
Suderman says if you look at history, the odds of the final USDA yield moving higher or lower are nearly the same.
“We have seen pretty much a split over the last 28 years of the final yield being higher than the August yield or being lower for both corn and soybeans,” says Suderman.
Rather than focusing on the yield printed in the August report, Suderman says the focus now is weather and how it aids or impedes the crop’s finish.
“In the end, it really comes down to what kind of grain fill weather do we have,” says Suderman. “Is it very favorable, or is it not? Is it hot and dry? Or is it cool and wet and allowing for depth of kernel? That’s going to be the big key and, I think as a result of probably puts a lot more emphasis on next week’s Pro Farmer Crop Tour.”
Suderman says instead of focusing on every yield check in every state, he thinks the more important factors produced by Pro Farmer next week are kernel depth, pod fill and the number of pods in the field.
“I think that’s going to be a lot more narrative to set the tone for what to expect out September report that has this objective field surveys in it,” says Suderman.
Pro Farmer Crop Tour Kicks Off Monday
Starting Monday, the Pro Farmer Crop Tour will ground-truth crop production forecasts as the 2021 tour kicks off. The tour provides insights into potential corn and soybean yields and gathers scout reports from 2,000-plus fields across seven states – Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio and South Dakota.
Register and attend nightly meetings in person or watch the nightly broadcast live at 7 p.m. Central to receive daily results, scouting observations and historical comparison data from our tour leaders.
