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Anticipation builds for USDA’s August report

Getty/iStockphoto USDA building
The plot thickens: Trade hopes yield and ending stocks provide insight

Friday’s USDA WASDE report is already spreading angst within the agricultural industry as the clash between potentially lower yield due to hot weather meets the long-term demand story, amidst the backdrop of uncertain global supplies.

Last week I wrote about items that trade will be watching heading into the report. And more recently, Jacqueline Holland wrote a very thoughtful article regarding overall yield potential going forward. 

Ongoing yield debate

My hunch says that whatever the USDA prints for yield on Friday will be met with mixed emotion from all sides of the industry. I can already imagine social media lighting up with dramatic debate once the information is released on Friday.

Remember though, on this report, the USDA gathers their yield information with farmer survey, satellite imagery and their own fancy statistical formulas; no one is actually stepping into a field to measure anything.

Back in 2019, the USDA switched their method of weighing ears as part of their approach to estimate corn yield. USDA now waits until the September report to include data from the field.

Trying to further gain insight on what this report might say, I went back fifteen years and looked at differences in new crop ending stocks from the July USDA report to the August report.

Mixed results for ending stocks

For soybeans, six out of the past fifteen years, the USDA has increased carryout from the July report to the August USDA report. Seven out of the past fifteen years, the USDA has decreased carryout from the July report to the August USDA report leaving two years, where new crop ending stocks were left unchanged.    

Soybean ending stocks after August WASDE
Click to expand

For corn, nine out of the past fifteen years, new crop carryout was increased on the August report, while six out of the past fifteen years saw carryout decrease. Again, no clear trend is offered.

Corn ending stocks after August WASDE
Click to expand

I did then look to see how new crop corn and soybean prices traded post report over the past fifteen years, and finally something a bit more consistent popped up.

A pattern for new crop prices?

For both new crop corn and soybean prices, ten out of the past fifteen years, prices had a tendency to trade lower after the August report and into the last business day of the month.

Bottom line, the August USDA WASDE report offers plenty of information for the industry to dissect, with a slight historic tendency for lower new crop price action for corn and soybean futures after the report. Unfortunately for this report, there is no smoking gun you can rely on. You can’t outguess these USDA reports, nor how the market will react, so be ready for anything by incorporating strategic marketing on your priced and unpriced bushels.

Reach Naomi Blohm at 800-334-9779, on Twitter: @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

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