With a big-ticket WASDE report, it was a busy week for the grain markets.
The Aug. 12 USDA report set a bullish tone for corn and soybean prices as harvest season nears, Brian Doherty of Total Farm Marketing said, as yield estimates were lower than expected. National corn yields were pegged at 174.6 bushels per acre, down nearly 5 bushels from the July estimate, while soybean yields were lowered nearly half a bushel per acre.
Doherty noted some of these new yield estimates come despite expected record yields in the eastern growing regions such as Indiana, Ohio and portions of Illinois.
“Top soybean-producing state Illinois is estimated to have a record 64 bushel per acre crop this year,” Doherty said. “Very low yields are projected in the Dakotas, and a 7-year low projected in Minnesota did the heavy lifting of dragging down the national average.”
Mike Zuzolo, an analyst with Global Commodity Analytics, said this move lower in yields is an effort to be proactive with weather effects and expectations. While U.S. yields were lower and demand was lowered for soybeans and wheat, supply in other regions helped support the markets as well.
“The Brazil (corn) crop was also cut to 87 mmt,” Zuzolo said. “We have less competition than we did 24 hours ago as a result.”
Wheat markets are also finding support from the recent report, as Russia and Canada production numbers were reduced to go with a 19-year low for U.S. wheat production. A lack of supply should continue to support prices. That led to an overall bullish view moving forward in the grain markets. There are still concerns present about demand factors for soybeans as estimates for China demand were lowered in the recent report. Those ideas haven’t yet found their way to soybean price charts, however, in the days following the report.
“The market now has potential in my view, especially for corn and wheat,” Zuzolo said. “In soybeans, we saw an increase in world numbers, but hopefully that yield being cut will offset things in the short term.”