USDA’s September Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports usually don’t get much attention. Sure, media types flock to the lock-up like always and analysts drool at the prospect of having another set of estimates to analyze, but generally speaking, grain and oilseeds markets don’t get all that excited.
That could change this year after USDA’s initial survey-based guesses in August came in well above all the analysts’ pre-report guesses. As one would expect, grain and oilseed markets hit the skids with Dec corn losing 45 cents (12% of its value), November soybeans falling 67 1/2 cents (7%), and December Chicago wheat dropping 67 cents (14%).
All because of how one set of guesses related to another set of guesses.
USDA will release its latest Crop Production and WASDE reports at 11 a.m. CDT Tuesday, Sept. 12.
Heading into the September round of reports, it looks to be the same game of whose guesses get closest to USDA’s. The numbers themselves are irrelevant, because nothing more is actually known about the 2017 crop than it was back in August. The earliest-planted acres — and therefore harvested acres — could be finalized by using FSA’s numbers in October.
But, normally, “final” numbers aren’t published until January. National average yield remains anyone’s guess, again until UDSA publishes what’s supposed to be its final tally in January. So without actual harvested acres or real yield data, final production is — well — just another guess.
As the old infomercials scream, “But wait, there’s more!”
We also won’t know beginning stocks for either corn or soybeans, given that the final, data-based number isn’t available until the release of the Sept. 29 Quarterly Stocks report. So, no total production, no beginning stocks, and really no idea other than a rough average of expected imports to calculate total supplies.
But the numbers will be released, and markets will move anyway.
What are the pre-report numbers you ask? For what they’re worth, the average estimate for corn production came in at a nice, round 14 billion bushels (convenient, right?). This is down slightly from USDA’s August guess of 14.153 bb. National average corn yield is expected to come in at 167.8 bushels per acre, also below USDA’s August dart-in-the-dark estimate of 169.5 bpa.
But here’s where it really gets fun, because to get an ending stocks figure, you have to subtract one set of guesses (total demand) from another set of guesses (total supplies) with a range of estimates running from 2.323 bb to 1.898 bb (a range of 425 million bushels). Somehow, the average pre-report figure comes in at 2.133 bb.
It’s the same game in soybeans. The average pre-report total production guess came in at 4.321 bb as compared to USDA’s August release of 4.381 bb. National average yield turned up at 48.7 bpa, also down slightly from USDA’s August pencil mark of 49.4 bpa.
Again using the fuzziest math possible, ending stocks are expected to be 437 mb as compared to the August number of 475 mb. But take note of the range from 540 mb to 325 mb — a range of 115 mb. This is more than 25% of what the average guess turned out to be (437 mb).
Analysts are going to make it more difficult for USDA to come in outside the range in September, that’s for sure. They aren’t going to be made the fool again, right?
|U.S. CROP PRODUCTION (Million Bushels) 2017-18|
|U.S. AVERAGE YIELD (Bushels Per Acre) 2017-18|
|U.S. ENDING STOCKS (Million Bushels) 2017-18|
|U.S. ENDING STOCKS (Million Bushels) 2016-17|
|WORLD ENDING STOCKS (Million Bushels) 2017-18|
|WORLD ENDING STOCKS (Million Bushels) 2016-17|
Darin Newsom can be reached at email@example.com
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