Analysts are taking issue with what they see as high corn and soybean yield numbers in the United States Department of Agriculture’s latest World Agricultural Supply and Demand Estimates report.
USDA estimated corn yields would come in at 169.5 bushels per acre, which was 3.30 bu. above the average trade estimate and 6.70 bu. above the forecast from Arlan Suderman, chief commodities economist with INTL FCStone.
The soybean estimate came in at 49.4 bu. per acre, which beat the average trade estimate by 1.9 bu. per acre.
“The August crop report is known for its surprises and the USDA didn’t disappoint,” said.
If the USDA is right, it would have major ramifications for grain and oilseed prices.
Suderman’s corn yield estimate would result in year-ending corn stocks of 1.6 billion bushels and a marketing year average cash price of $4.35 per bu.
The USDA’s yield estimate, according to Suderman’s calculations, would see stocks soar to 2.37 billion bushels and an average price of $3.35 per bu.
Suderman is also skeptical of the USDA’s soybean estimate.
Soybean yields are made or ruined during the key pod-filling period and that doesn’t come until later in August.
That is why the USDA usually provides a conservative estimate in the August report, but not this year.
Commodity Weather Group has analyzed seven years with similar rainfall patterns and temperatures in the Midwest and similar crop condition ratings.
The final yields in those years ranged from 40 to 50 bu. per acre. The USDA is already at the high end of that range with its estimate.
Suderman said the crop could end up at 49.4 bu./acre or even match last year’s 52.1 bu./acre but it could also be as low as 45 bu/acre.
He forecasts 47.7, which would result in 446 million bu. of ending stocks and a marketing year average cash price of $9.40 per bu.