August USDA Report
Tuesday, August 12, 2014, 11:08 AM
Submitted by: Dustin Weiner
The USDA report was out and for those who were expecting, or maybe hoping, for some fireworks – it is a bit disappointing (read: quiet). Corn yields came in below the average trade guess.. At first glance you could say that with the USDA coming in with a smaller crop – corn prices should be higher, maybe even sharply higher. It is important to note that this crop is still projected to have a record US yield on it, pushing it over 14 billion bushels…. that is a lot of corn. If you take that and add in the thought that in years like this “big crops get bigger” you could have a hard time going long corn in here which helps explain why prices are struggling to move higher despite the lower yield projected from the USDA.
Soybeans. This one looks a little bearish. The USDA bumped the yield up a touch and carried those bushels right into a now larger-than-expected carryout for next summer – 430 million bushels. For reference the carryout this summer is just 140 million bushels so that is a big change on the overall availability of soybeans in the market. Generally speaking beans still look overpriced when compared to corn. It feels like the market is still holding onto a weather premium in beans (how will August finish up?). If we can get another few weeks down the road without cutting into potential soybean production you can make a case for beans to go test some new lows.
Some facts/stats from today’s report on the 14/15 crop:
· USDA corn yield 167.4 bpa, the trade expected 170.1bpa
· USDA corn carryout 1.808 billion bushels, the trade expected 2.005bb
· USDA soybean yield at 45.4bpa, the trade expected 45.2bpa
· USDA soybean carryout 460 million bushels, the trade expected 414mb