Headlines:

  • Soy futures hit 2-month high on surprise yield downgrade. Corn gains too
    Soybean futures jumped to their highest levels since July, helping corn futures recover from contract lows, after US officials made a surprise downgrade to their forecast for the domestic yield. The US Department of Agriculture, which two weeks ago cut its estimate for the 2016 US soybean yield, on Thursday downgraded the 2017 one too, by 0.5 bushels per acre to 49.5 bushels per acre. The unexpected move, which contrasted with investor expectations of a small increase in the 2017 yield figure, was offset in production terms by an increase in the estimate for soybean sowings, which were now seen topping 90m acres for the first time. “Acreage updates were made in several states based on a thorough review of all available data,” the USDA said, while stressing in its yield estimate “a lower pod count from the previous year” in major growing states. Nonetheless, the outcome of the revisions was to leave the USDA’s estimate for US soybean carryout stocks below market expectations, although they will remain the highest in 11 years.
  • US sees China as ‘major wildcard’ in cotton, as it cuts domestic crop hopes
    The US ditched expectations of a record cotton yield this year, citing hurricane damage to crops, in reports which also flagged as a “major wild card” the potential for fresh Chinese imports of the fiber. The US Department of Agriculture, in its much-anticipated WASDE crop report, cut its forecast for the domestic cotton harvest this year by 643,000 bales “largely in Texas and Georgia”, the top two producing states. The downgrade – which followed a reassessment of crops in the light of Hurricane Harvey, which ravaged south east Texas, and Hurricane Irma, which struck further east – reflected reductions to expectations for both harvested area and yield. The US cotton yield estimate was downgraded by 19 pounds per acre to 889 pounds per acre, taking it back below the current record of 892 pounds per acre recorded in 2012″.

Summary:

The trade responded bullishly to today’s USDA crop production and supply and demand reports particularly for Soybeans and some for Corn as well. In today’s report the USDA pegged the US Corn average yield at 171.8 bushels per acre versus the average trade estimate of 169.8 bushels per acre 1.9 bushels per acre more than last month’s report. Soybeans came in at 49.5 bushels per acre which was just shy of the average trade estimate of 49.9 bushels per acre (and the prior month’s USDA estimate of 49.9). US Corn stocks for 201-18 were at 2.34 billion bushels versus the average trade estimate of 2.25 billion bushels. Soybean ending stocks are pegged at 430 million bushels which was well below the average analysts’ estimate of 452 million bushels. The US Wheat ending stocks came in at 960 million bushels which was higher than both the average trade estimate of 944 million and the USDA’s prior month’s estimate. December Corn finished out the day up 2.75 cents and Wheat was down 2.50 cents. The truly volatile action came at the hands of Soybean futures that finished the day up 27.75 cents which was 4.75 cents down from the intraday high print.