Higher Yields Stun Corn & Beans, But U.S. Harvest Needs To Verify

Market Analysis

For the 2nd month in a row, the USDA stunned the corn and soybean markets with higher-than-expected crop production levels than the trade was anticipating. Instead of a modest monthly decline in their US average yields this month given the below normal rainfall that has occurred across many areas of the central US in the past 60 days, corn and soybeans outputs rose from 150 to 100 million bushels over the trade’s average crop size.

September’s US corn output was projected at 14.184 billion bu., up 31 million bu. from August, 0.4 of bu. higher yield than last month and 1.7 bu. higher than the trade at 169.8 bu. With a bout of rain activity pushing into the NW region of grain belt in the first half of August that boosted soil moisture above average, both ND (+3) and SD (+5) corn yields were increased. However, IA (-1), MN (-1) and NE (-2) yields were shaved this month along with some dry area of the ECB (IN-2 and MI-1). Given the limited rainfall the past 2 months, IL’s 1 bu. rise to 189 bu. average yield was our biggest surprise. September’s implied ear weight slipped from .349 to .342 per lb., but the USDA’s ear count also advanced by 600 to 28,700 ears/acre keeping Sept’s US output above expectations & last month.

This month’s soybean crop forecast was 50 million higher than August at 4.431 billion and 103 million bu. over the trade’s forecast. September’s US bean yield was 1.1 bu. higher at 49.9 vs. the trade’s 48.8 bu. estimate. Similar to corn, MN and NE yields were off 2 bu. while ND (+2) and SD (+4) were higher. Recent dryness in the I States didn’t impact yields either (IA+1, IN+1 and IL unch) in this month’s update. The big consternation within the trade is the USDA’s record implied pod weight of .340 grams/pod, up from last year’s .328 gram level despite this month’s 190 lower pod number in 18 square feet.

Modest 2016/17 export increases shaved corn & bean stocks while higher 2017 supplies left stocks unchanged.