Good morning,

Grain markets dropped sharply in yesterday’s trading session in response to the USDA releasing data that showed higher than expected crop volumes. Markets continue to price in the data this morning and try to find fair values for many of the commodities across the board. Corn is currently down 11 cents, soybeans are up 13 cents, and wheat is down 2 cents. The data came as a huge shock to the system as many traders were expecting the report to be quite bullish, especially in the corn market. However, the USDA had other things in mind and threw another curveball our way. The report printed corn production higher than all estimates in both a larger acreage number and a higher yield number. The larger area in corn production came at the expense of the soybean area as the soybean acres decreased by a fair amount. Going forward, there is really no longer a debate regarding the acreage numbers as the FSA certified report really verified the governments planted numbers plus or minus 1 million acres. With no area updates from the government until the October report, I believe markets will now shift their attention to yield and demand over the course of the next couple months. In the immediate future, the markets will continue to deal with the fallout from yesterday’s report. The corn market especially has some a lot of work to do to find fair values as liquidation will be the theme over the next few sessions. Once the new lows are established, I expect trade to ultimately become range bound and remain choppy as the yield debate will be a theme until producers can get into the fields and know what is really out there. The weekly crop progress report was released yesterday afternoon. It came in estimating the corn condition ratings at 57% GTE (56% GTE expected, 57% GTE last week, 70% GTE last year, 69.4% 5-year average). The soybean condition rating came in unchanged once again at 54% GTE (53% GTE expected, 54% GTE last week, 66% last year). To give a recap, I included the USDA’s numbers that were released with yesterday’s report.
USDA 2019-20 Corn and Soybean production

USDA Aug. 2019-20 estimate Average of analysts’ estimates Range of analysts’ estimates USDA July 2019-20 estimate
Planted Acres 90.000 87.998 83.494-89.800 91.700
Harvested Acres 82.000 80.050 76.114-81.900 83.600
Yield 169.5 164.9 161.0-167.2 166.0
Production 13.901 13.193 12.723-13.550 13.875
Planted Acres 76.700 81.006 78.000-83.500 80.000
Harvested Acres 75.900 79.890 77.300-82.800 79.300
Yield 48.5 47.6 46.0-49.0 48.5
Production 3.680 3.800 3.633-3.974 3.845

USDA 2018-19 U.S. Grain and Soybean ending stocks
USDA Aug. 2018-19 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2018-19 end-stock estimates
Corn 2.360 2.392 2.220-2.490 2.340
Soybeans 1.070 1.065 0.988-1.124 1.050

USDA 2019-20 U.S. Grain and Soybean ending stocks
USDA Aug. 2019-20 end-stock estimates Average of Analysts’ estimates Range of Analysts’ estimates USDA July 2019-20 end-stock estimates
Corn 2.181 1.620 1.281-1.900 2.010
Soybeans 0.755 0.821 0.607-0.950 0.795

Have a great day!

Drake Bliss