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Aug. 12 reveals bearish numbers

By Doug Tenney, Leist Mercantile

Finally. Suspense. Long awaited. USDA did it again. We waited this long? All describe the Aug. 12 USDA Monthly Supply and Demand Report out today at noon.

USDA estimated 90 million corn acres with a yield of 169.5 bushels per acre. Corn acres 2 million acres above trade estimates. Soybeans were 76.7 million acres with a yield of 48.5 bushels per acre. Soybeans acres were 4 million acres below expected. Trader estimates for this report had U.S. corn acres at 88 million acres compared to the July USDA number of 91.7 million acres, down nearly 4 million acres. This month they estimated 81 million soybean acres. Last month USDA had estimated 80 million acres of soybeans.

Shortly after the report corn was down 22 cents, soybeans unchanged, while wheat was down 15 cents. Huge price volatility was expected following the noon reports.

The market has been starving for news the past six weeks. The news cycle has been dominated by weather forecasts, actual rainfall amounts, and the U.S./China trade talks. Supply bulls have been frustrated with the price declines during July and early August. Demand bears have been delighted to see ongoing ideas of further weakening with U.S. grain exports.

Numerous reports we have seen since the June 28 USDA acres release suggest the higher corn prices which occurred late May and early June likely increased U.S. corn acres above the March 29 Planting Intentions Report of 92.8 million acres. U.S. corn acres before the rain delayed spring planting season could have been as high as 98 million acres. December CBOT trading above $4.40 played a significant role in the expectation of higher corn acres compared to March.

Producers and traders have been waiting for nearly six weeks since the bearish June 28 USDA Acres Report. It had corn acres much higher than expected. December CBOT corn that day was down 19.5  cents when USDA estimated 2019 U.S. corn acres at 91.7 acres. November CBOT soybeans were up 10 ¾ cents when U.S. soybean acres were pegged at 80 million acres which was below expectations. Within days after the June 28 report was released USDA reported they would be another survey of corn and soybean acres in at least ten states. Results were to be reported in August.

Rains during the weekend along with its expectations played a big role in the price declines this morning. Mid-morning corn was down 6 cents with soybeans down 9 cents. Weekend rains of .2-inch to 1 inch moved across Iowa and northern Illinois. Chicago could see heavy rains later today. More rain is expected to move through the Midwest this week. In coming weeks the Gulf of Mexico is expected to see increased tropical activity which should result in better chances of rain moving up into the Midwest.

You may be surprised to know FSA numbers for prevent plant corn and soybean acres will be released today just one hour after the noon report. Those numbers will not be incorporated into NASS numbers until the Oct. 10 reports.

Yields will be closely watched in coming reports. Today it was all about acres.

One thing seems almost certain this fall. Lots of natural gas and propane will be needed to dry corn and soybeans as they move out of the field. It will be a long harvest period this fall.

 

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