CornHarvest_1

My big questions after USDA record yield numbers for corn

Kevin Van Trump shares analysis of the USDA production report released this week.

Corn is pressured lower on massive +3.6 bushel per acre yield increase by the USDA, moving from 171.8 to 175.4. It if holds this will be the highest average yield ever harvested in our nation's history. total U.S. production is pushed to 14.578 billion bushels. Bulls are obviously saying the USDA's  current yield forecast is overstated, but it seems to be falling on deaf ears.

There were huge yield bumps for several important production states: The Indiana and North Carolina yield jumped higher by +8 bushels per acre compared to last month; Illinois, Iowa and Minnesota each jumped higher by +6 bushels per acre; Wisconsin improved by +4 bushels; Colorado, Kentucky, Missouri and South Dakota all improved +3 bushels per acre; Kansas and the Carolina's im[proved by +2 bushels per acre; Tennessee by +1 bushel per acre. The only state that pulled back was Nebraska, where the yield estimate was lowered by -2 bushels per acre.

If there was anything bullish, it was the fact both "feed and residual" and "export" demand were bumped higher by +75 million bushels each. Corn for ethanol was left unchanged at 5.475 billion bushels. Unfortunately, the +150 million bushel bump in total demand was more than offset by the massive bump in yield. In turn, ending stocks are pushed higher from 2.340 billion to 2.487 billion bushels.

Global ending stocks were also bumped higher to 203.9 MMTs. Argentina and Brazilian production was left "unchanged". Ukraine production was lowered from 27 to 25 MMTs, exports from Ukraine were also lowered from 21.5 to 20.5 MMTs. Mexico imports were raised from 15.5 to 16.5 MMTs. South Korean imports were lowered from 10.2 to 9.7. China corn is cut 500,000 tons to 2.5 million.

Bottom-line, record yield being forecast for the U.S. more than offsets the reductions in the global forecast. The U.S. season-average farm price remains unchanged at $3.20 per bushel.

The big question now, will yield continue to move higher into the yearend report? What type of yield estimate will the USDA start with for the 2018 season? This is important with corn acreage thought to be moving slightly higher next year and ending stocks this burdensome.

Without a weather story in South America, a lid could be kept on corn prices for a more extended period. I continue to keep hedges in place, thinking prices will remain in a sideways to lower trend. As I've said for many many weeks, I don't believe the low is yet in place.... A push towards $3.20 is still in the cards. GET ALL MY DAILY AG NEWS HERE

 

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