Corn, Soybeans Consolidate After Bumper Harvest Forecasts

USDA Trims Corn Yield to 169.5 BPA But Above Analysts Estimates

Average corn yield in 2017 was forecast at 169.5 bushels an acre, down 3% from 174.6 bushels in 2016. Average yield was forecast at 27.2 bushels an acre, down 3.7 bushels from July and down 16.8 bushels from 2016, with harvested area at 1.86 million acres, unchanged from July but down 21% from a year ago. The average soybean yield was forecast at 49.4 bushels an acre, down 5 percent from 52.1 bushels previous year, with harvested area forecast at a record-high 88.7 million acres, unchanged from June but up 7 percent from 2016. Figure 1 highlights actual and projected corn and soybean USA average yields. The average trade estimate for the final corn yield was 165 bushels per acre and ranged from 162.4 to 168 bushels per acre. Area harvested for grain is forecast at 83.5 million acres, unchanged from the June forecast but down four percent from 2016. The agency also conducted field and lab measurements on corn, soybeans, wheat and cotton in the major producing states, which usually account for about 75 percent of the US production.

Winter wheat outturn was estimated at 1.287 billion bushels, up 1% from July but down 23% from 1.671 billion bushels in 2016. This month's report is the first of the season to forecast row crop production. The odds of this happening before July 2018 are about 20 percent. In the latest poll by Reuters, the average trade guess is for corn yield to be reduced to 166.2 BPA from 170.7 in the July report. While many in the trade anticipated a smaller soybean crop, it's not a guarantee as evidenced by USDA's yield and production estimate.

The report's yields are very high and imply much better crops than what we saw last weekend in central IL. At the state-level, crop conditions remain below 2016 levels, Figure 5. The USDA said that private exporters reported sales of 120,000 metric tons of soybeans to China for delivery in 2016-17 and 2017-18. However, at this point in the growing season, it does not appear that this year's crop conditions have substantially impacted crop yields relative to the historical trend.


The most active soybean futures are down almost 1.5 percent for the week, extending losses into a third consecutive week.

Higher on bargain buying after the CBOT November contract dipped to $9.37 a bushel in early moves, its lowest since June 30.

With the 2017/18 crop still in the ground, a significant amount of uncertainty remains. As more information is revealed about the size of the 2017 crop, attention will then turn to the pace of corn and soybean consumption to derive price expectations throughout the marketing year.

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