Friday’s USDA supply and demand report, which will be released at noon, will not be based on actual crop yields. Rather it will be based on what the analysts in Washington think this year’s crop will yield, based on crop condition reports. The acreage number they will use will be the one released by USDA on June 30. Mike Silver, with Kokomo Grain, says many in the market feel they will likely cut the yield projections because of the poor crop conditions in the Eastern Corn Belt, “While it is not definite, there is precedent for them to reduce the yield; and many in the trade, including me, think they will.”
What traders do not agree upon is how much will they adjust the yield. Jim Riley, with Riley Trading, told HAT he expects only minor adjustments. Silver, however, feel the cut could be significant, “I feel a soybean yield of 43 bpa is possible.” The current USDA national yield estimate is 46 bpa, and the average of market guesses is 45 bpa. Silver believes the corn yield cut could be even larger, “I feel they could shave 3 to 4 bpa off the current average.” That would put the yield at 163 bpa.
Anticipation of these cuts has been behind the two days of higher prices we have seen. Silver says the fact that we are going into the report higher may keep the market reaction somewhat less volatile, “The fact that it is a Friday and that we are up against some very stiff resistance on the charts may keep the market from exploding to the up side.”
Silver believes that the market has a good deal of upward potential and this may provide some pricing opportunities for farmers, “I think the market has good strong legs under it, especially if the weather continues to be cool and wet.” He urged growers who have not booked a lot of new crop grain to take this opportunity to lock in sales above the market, “We are above the crop insurance guarantee so this is a time to take action as we move through a very uncertain summer.”
Hoosier Ag Today will have details of the USDA report as well as analysis available on our web site and mobile app shortly after the report is released.