Anticipation builds for USDA August reports on Thursday

The anticipation for Thursday’s USDA reports may not be as great as waiting for the release of thick ketchup from a bottle or the New York Yankees baseball game against the White Sox. Chicago at Field of Dreams in Iowa, but it’s huge.

On Thursday, the USDA will release its August reports on agricultural production in the United States and supply and demand in the United States and globally at 11:00 a.m. CT.

Specifically, investors will be watching to see where the USDA prints its US corn and soybean yield and production estimates.

But

In its previous estimate, in July, the USDA put the average yield of American corn at 179.5 bushels per acre. The trade expects the government agency to lower this estimate by nearly 2 bushels.

If that were to happen, it would mean the United States would produce about 100 million bushels less corn this year than the July estimate.

Peter J. Meyer, S&P Global Platts, responsible for grain and oilseed analysis, says corn yield will be the most watched number.

“It seems to be a concluded fact that the Brazilian corn crop suffered a massive failure with no less than three freezes / freezes at the end of its growing season, but the futures market remains relatively unfazed, if you can call. $ 5.50 unfazed, ”Meyer says.

Given all the hype and rhetoric about corn, despite the market having moved little away from the $ 5.50 level over the past six weeks, it is this US corn figure that will have the most impact, says Meyer.

Meyer believes it will take a corn yield of less than 175 to bring corn down to $ 6.00 a bushel, and we expect an August yield of between 177 and 180 bpy.

Britt O’Connell, never. ag, says each USDA report has its own surprises and expectations.

“As we approach the long-awaited WASDE release in August, Wednesday’s grain markets find themselves slightly stronger,” O’Connell said.

For tomorrow’s report, traders’ eyes will first be drawn to the 2021/2022 corn yield expectations, she said.

“Yield estimates for US corn before the report range from 180 to 175.7 bushels / acre. Keep in mind that the current high efficiency mark is 176.6 bpa. So in general, the trade expects a record return, ”says O’Connell.

After the corn numbers, traders’ eyes turn to the past crop record and see what the USDA is doing with old crop corn exports, she said.

“We’re not on track right now to be able to take all the old crop corn still on the books out of the country,” O’Connell says.

Soy

In its previous report, the USDA set the average yield of US soybeans at 50.8 bushels / acre with a total production estimate of 4.405 billion bushels.

In pre-report estimates, trade sees USDA pegging US soybean yield similarly to its July estimate.

Meyer added: “In the soy category, the late August rains always either make or destroy the soy crop, so an August estimate is just that.”

Jerry Gidel, Midland Research, says the growing season has seen two different stories unfold for the Corn Belt.

“Spring drought in the northern plains has spread to other western Corn Belt (WCB) states, while normal to above rainfall has occurred in ECB and SE,” Gidel said in a daily note to customers on Monday.

Since May, USDA good / excellent crop ratings have dropped 10 points to 62 percent for corn and 7 to 60 percent for soybeans, Gidel noted.

Both are 5% lower than the 5-year average rating for each crop.

It’s worth noting that over the past 60 days, much of the Midwest has received only 25 to 70 percent of its normal precipitation, Gidel says.

Survey results

For the second year, USDA’s August harvest estimates are based on a grower survey and improved satellite views of harvests compared to previous years enumerators’ plant counts, a producer performance survey and satellite views.

“Since the August yield figures are based primarily on surveys of farmers, we are concerned about the low survey response rates observed in the June acreage report as well as the June stocks report. . NASS may be forced to use more satellite data than normal if surveys are disappointing in numbers, which we know they are reluctant to do, ”Meyer said.

Other categories

The USDA will update its ending inventory estimates for corn, soybeans and wheat in the United States on Thursday. In general, the trade expects the USDA to slightly increase its ending stocks of old crop corn and soybeans.

On new crop ending stocks, the trade sees the government lower corn ending stocks by more than 100 million bushels from its July estimate of 1.432 billion bushels, while increasing stocks slightly. soybean closing at 159 million bushels.

For wheat, ending stocks for the new US crop are forecast to decline slightly from the USDA’s July estimate of 665 million bushels.

Trade does not expect much change from July estimates for global ending stocks.