Headlines:
Are the USDA’s ‘Wild Yield Hikes’ Realistic?
It’s rare that USDA would raise soybean yields 6% or more in any one report, but they did just that for soybean yields in the August 10 USDA report. In fact, about half the time, USDA doesn’t need to change the final yield number more than 5% up or down the entire year. To put this in perspective, USDA did so in August with a rise that is larger than many whole years in the past. Last year, USDA got aggressive early in predicting large corn and soybean crops, only to back off the soybean numbers considerably by January’s final numbers. Could they be forced to do the same again this year? The corn number was more believable with a hike in yield but a smaller percentage as well as a crop advanced enough to actually make those hikes. In other words, it was reasonable to hike the corn numbers, albeit a bit early. So, the corn numbers are more in line with the Pro Ag yield estimate as well as many private estimates, but the soybeans blew everyone’s estimates out of the water.
Soybeans Climb as U.S., China Plan for Fresh Trade Talks
U.S. soybean futures climbed to a one-week high on Thursday as plans for Beijing and Washington to hold fresh trade talks raised hopes that U.S. soy sales to China will increase after being stalled by a tariff dispute. The rally in soybeans, along with an easing in the U.S. dollar, helped wheat and corn futures to rise too, traders said. Prices jumped after China’s Ministry of Commerce said a Chinese delegation will travel to the United States for trade talks this month. The gains were a turnaround from Monday, when soy futures dropped to a three-week low on fears that U.S. inventories would pile up because of a record-large harvest and the trade row. China is the world’s top soy importer and bought $12 billion worth of the oilseed from the United States last year, making soybeans America’s top farm export to China. However, the trade stand-off has prompted Beijing to impose extra tariffs on U.S. soybeans and shift its purchases to Brazil.
Summary:
Positive NAFTA news and good export sales pushed the corn market higher today. Prices rallied further when US Trade Representative Lighthizer was quoted in the middle of the trading day as saying that he hopes there will be a breakthrough in the NAFTA trade talks over the next few days. Export sales were strong for both old and new crop corn this morning. Soybean found lots of buying support on news of discussions with the Chinese taking place. Bear in mind that nothing has fundamentally changed yet. Soybean export sales were neutral today landing in line with trade estimates. Wheat rallied off of support after a strong export sale figures this morning along with the NAFTA news. Wheat exports came in well above estimates and we also saw a large sale of HRW to Iraq in the USDA early morning report.
