As harvest ramps up, will yields fuel USDA estimate debate?As harvest ramps up, will yields fuel USDA estimate debate?
Technically, corn remains stuck in a sideways trading channel near the low end of the range.
October 11, 2017
Corn traders are waiting to see this afternoons USDA estimate on harvest progress, as well as Thursday's update on yield and demand.
As you can see in the graphics I included below, we are starting to come into weeks where we tend to harvest the most corn. Any time during the next three to four weeks we should expect to see producers harvesting 15% to 20% of the entire U.S. crop. Meaning even if the harvest is further behind in this afternoons data, I have to imagine it will soon start taking much larger steps towards the finish line.
As for U.S. "yield" the debate continues, the USDA currently has the average crop yield estimated at 169.9 bushels per acre, which would actually be the third highest average of all-time. At first that might sound hard to swallow, but I've heard a lot of producers saying if this is not their best crop, it's certainly one of their top-5.
In other words, I'm not looking for any significant change in production by the USDA. As for South America, we should be digesting new numbers from CONAB. The USDA currently has 2018 new-crop production for Brazil forecast at 95.0 MMTs vs. 98.5 in 2017 vs. 67.0 harvested in 2016. The USDA is estimating Argentine new-crop production at 42.0 MMTs vs. 41.0 MMTs last year vs. 29.0 MMTs harvested in 2016.
Technically, corn remains stuck in a sideways trading channel near the low end of the range. Bears argue that we are poised to re-test lows down near $3.20 if the USDA pushes yield north of 170.0 bushels per acre, which is arguably a very real possibility, considering the USDA is just a fraction away at 169.9 bushels per acre.
On the flip side, bulls believe we can retest the $3.75 to $3.90 resistance on a yield sub-169.0. As a producer, I'm keeping nearby hedges in place and looking to reduce longer-term price risk on a rally in the deferred contracts such as the DEC18 and DEC19. As a spec,
I would like to start building a conservative longer-term bullish position, but am currently in no hurry, simply wanting to see more cards turned over.
About the Author(s)
Founder, Farmdirection.com
Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead.
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