This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Friday after the close ProFarmer released their national yield estimates for both corn and soybeans. They also released their state yields for each state of the tour. The state numbers released throughout the week are not statewide yield estimates, just for the actual tour route. To arrive at their state and national yield estimates, the ProFarmer analysts used the tour data and also satellite NDVI data, weather forecasts and other information to arrive at their estimates. ProFarmer estimated corn yield at 181.1 which is 2 bushels less than USDA’s August yield estimate of 183.1. Using USDA’s harvested acreage number, that takes 169 million bushels off of production and drops carryout just below the key psychological level of 2 billion bushels to 1.9 billion.
On soybeans, ProFarmer found yield potential well above USDA’s August estimate. They estimated bean yield at 54.9 bushels per acre which is 1.7 bushels higher than USDA at 53.2. If realized that yield would increase production by a whooping 147 million bushels which adds 25% to carryout assuming no changes in demand. Going from 560 million bushels to 707 mb. We have to look back to the trade war to see the possibility of a carryout that high.
Overall the ProFarmer corn number looks mildly supportive to corn and very bearish to beans. We will get USDA’s next yield update on Sept 12th where they will use surveys and satellite data like in the August estimate but will also include their own objective yield measurements in this report as well. Market will be looking for confirmation of the direction of changes in addition to the actual yield estimates. The Profarmer numbers put forth the idea that corn yield may trend lower while beans could go higher. Soybeans still have more growing season left to finish. As we all know it’s not yield until it’s in the bin and we still have some time left. There is a hot dry finish forecast for some key areas but overall the US weather premium is coming out of the market.
Monday’s trade was counter to what we got from ProFarmer with corn trading sharply lower and beans managing to close higher. The pressure on corn seemed to come from the September contract going into delivery. There still a tremendous amount of basis contracts that have to be priced or rolled. We saw most of the pressure in the sept corn on monday.
Soybeans have seen a big uptick in export demand as we have the cheapest beans in the world but it will take a lot more export demand to overcome the additional supply the increase in yield is adding. USDA adding almost a million acres to soybeans on the August report continues to handicap the bean bulls. It is going to take the threat of a weather problem in South America to scare some buying in the beans. But as the window for Northern Hemisphere weather to drive the market closes, it starts opening in South America in September.