Special Market Update

What will this week’s USDA report tell us?

On Thursday, September 12^th, the USDA will release its monthly supply and demand report for U.S. corn and soybeans. This report will be the first report of the year to incorporate ear counts for corn and pod counts for soybeans. (Prior to this report, only farmer surveys and satellite imagery was used to come up with the estimated yield). Here are some other things pertaining to this week’s report to keep in mind:

PLANTED ACRES
Planted acres for both corn (90.0 million acres) and soybeans (76.7 million acres) are not expected to change much in the September report. This number may be revised in October, once USDA has tabulated all PP acres reported by the FSA (Farm Service Agency).

HARVESTED ACRES
FSA’s increase of 2 million acres of prevented planted corn (compared to their previous report) suggests that harvested corn acres will eventually be lowered. The question is “when”?  Last week, it was reported that a “significant” revision to harvested acres due to cover crop acres is unlikely until the silage survey is completed, which may not be complete until the January 2020 final crop report.

Normally, 91.5% of the planted corn is harvested, with the rest either being chopped for silage or abandoned. Normally, 98.5% of the planted soybeans are harvested. In a normal year, this would equate to 82.4 million acres of harvested corn and 75.5 million acres of soybeans. This year, due to the lateness of the planting, we may see the percentage harvested lower than normal.

YIELD
As of September 9^th, only 55% of the corn in the U.S. has dented this year, compared to 77% normally. Similarly, only 92% of the soybeans have set pods, compared to 100% normally. This lateness in crop development means that the numbers released this week will be met with a higher level of uncertainty compared to years when the crop is further along and objective measures would mean more. Nevertheless, traders are looking for the corn yield this month to drop by 2.3 bushels per acre, from 169.5 bpa to 167.2 bpa. Traders are also looking for the bean yield this month to drop by 1.3 bushels per acre, from 48.5 bpa to 47.2 bpa.

DEMAND
Due to the slow pace of corn exports, traders are expecting USDA to lower corn exports for both the 2018/2019 crop year and the 2019/2020 crop year. Traders are also expecting USDA to reduce ethanol usage. To some extent, this will offset any reduction in yield. For soybeans, traders are expecting the 2018/2019 soybean crush to increase slightly in this month’s report.

ENDING STOCKS
Here are the average trade guesses of what analysts are expecting in this week’s reports:

If the numbers come in much differently than the above trade guesses, we could see fireworks on Thursday. (Remember that last month, corn was down the 25 cent limit on report day, and soybeans were down 12 cents).

Make sure you talk to your Andersons account rep ahead of the report to develop a strategy to prepare you for this week’s USDA report.