Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Pre-Report Production Estimates Are Mixed
Trading in the corn and soybean pits has followed the path of least resistance this week, trading sideways to lower, as weather throughout the Corn Belt has remained favorable for the late maturing crop ahead of USDA’s September supply and demand estimates to be released tomorrow morning. The average pre-report production estimate for U.S. corn is calling for 12.932 billion bushels, up from the August estimate of 12.761 billion bushels. Ending stocks for the 2009-2010 marketing year are estimated to increase to 1.769 billion bushels from the August estimate at 1.621 billion bushels.
The average production estimate for U.S. soybeans calls for a crop size of 3.256 billion bushels with a yield of 42.4 bushels per acre. The estimates ranged from 3.186 billion to 3.309 billion bushels for production and 41.5 to 43.1 for yields. In August, USDA projected a crop size of 3.199 billion bushels using a yield of 41.7 bushels an acre.
Of interest in the pre-report crop forecasting business was the Lanworth production estimates released to their clients on September 4. They are calling for U.S. corn production at 12.237 billion bushels on an average yield of 153.8 bushels per acre and 79.57 million harvested acres. Soybean production is expected to total 3.021 billion bushels, on an average 39.9 bushels per acre and 75.77 million harvested acres. Spring wheat production is expected to total 495 million bushels, with yields of 37.4 bushels per acre and 13.22 million harvested acres. Lanworth’s corn estimate is up 1 percent from the company’s August forecast but remains 4 percent below USDA’s August 12 estimate. Lanworth’s soybean estimate is also up 1 percent from August, but is 6 percent below USDA’s August estimate.
Market Strategy
Please note, the crop production estimates given above do not reflect the impact that an early frost would have on crop yields — the reason being that an early killing frost wouldn’t reduce production estimates unless one occurs. So, what is most likely to happen in tomorrow’s report? Likely, USDA will increase their corn and soybean production estimates based upon the favorable weather conditions experienced thus far. With most of the weather premium bid out of corn and soybean prices the primary pricing activity this week can be attributed to position squaring ahead of tomorrow’s report. Today’s opening would strongly indicate that, although the air mass felt chilly in Delaware this morning, no significant killing frost occurred overnight in the Corn Belt.
December corn and November soybean prices are trading in the lower one-third of their life-of-contract trading range with a distinct possibility of moving lower. Outside forces such as the declining value of the dollar, increasing crude oil prices, and the Dow could provide some support over time to commodity prices. An early occurring frost, if materializing, would rally corn and soybean prices to some degree during harvest. The magnitude of a possible frost event would dictate whether another opportunity for making additional pre-harvest sales arises. Currently, Dec ‘09 corn futures are trading at $3.12; and Nov ‘09 soybean futures are $9.33 per bushel.