Coming into the USDA World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports, private firms and the trade released their estimates. USDA blew past those estimates and raised its July corn projection 3.3 bushels to a record 181.8 bushels per acre. The trade estimate was 180.5 bpa.
On soybeans, USDA is forecasting a yield of 53.3 bpa, two bushels higher than the trade guess.
What might have been bearish news for the markets didn’t turn out to be quite that bearish with higher closes for both commodities.
“It’s not a huge surprise USDA we do get record yield estimates, but one of the positives is that the demand side is also up,” said Rick Hollister, grain merchant with The Andersons. “USDA has taken the corn use for ethanol to nearly as high as we’ve been historically for this new crop year which looks optimistic.”
For now, Hollister says USDA is using a good domestic usage for corn, and put exports better than what we’ve seen for the last three years. The same story can nearly be replicated for soybeans.
“Really good exports compared to the last few years,” he said. “Those numbers are shockingly high because we do have good sales on for the new crop, particularly for China for both corn and beans.”
Hollister added that with record yields, it’s a benefit to see all this strong demand.
“Ending stocks are not ballooning to the point where they could be with new record yields,” he said. “That’s the bright spot—USDA takes the crop size up but also takes the demand up with it.”
It’s also of note to mention the crop survey was done prior to the derecho that made its way through Iowa Monday, flattening potentially 10 million acres of corn, according to reports Hollister has heard.