August 10 – Soybean Prices Crater After WASDE Report

At the start of trading on the Chicago Board of Trade Thursday, grain prices pushed higher.

Corn prices and soybean prices were both ticking up before the USDA reported its August WASDE report.

Then, the selloff came.

Corn, soybean, and wheat prices cratered after the U.S.D.A. surprised the markets with a small downward revision to corn yields and an uptick in soybean yields. We covered the data earlier and the ensuing selloff in futures contracts.

Check it out here.

For more on what happened in the final hour of trading and closing prices, here is our daily recap of grain training from the floor of the Chicago Board of Trade.

Corn Prices Dip on Yield Revision

The September corn futures contract dropped 15 cents to close the day a touch above $3.57. The December new-crop contract fell 15.25 cents to close at $3.71. Blame the USDA… everyone on Twitter did.

Analysts were expecting that the agency would slash its corn production estimates down to around 166 bushels per acre.

The USDA had other expectations. The agency forecasted a harvest of 14.2 billion bushels and an average yield of 169.5 bushels per acre.

“But USDA only lowered it a little bit,” Jerry Gulke said today “There are people who think the ultimate yield will be between 160 to 163 bu. I don’t know how they got today’s numbers, but it is what it is.” [1]

If this figure holds, it would be the third-largest yield since the agency began recording data.

The agency also projected that U.S. production would be 14.153 billion bushels. That’s well above the consensus estimate of 13.855 billion bushels

The WASDE report overshadowed export data that was released by the USDA this morning. The agency said that the U.S exported 680,400 metric tonnes of corn for the week. That was in the middle of the range of expectation set between 400,000 metric tonnes to 800,000 metric tonnes.

Looking forward, it appears that dry weather is going to dominate the rest of August across the Corn Belt. This could be more bad news at a time that crop quality continues to deteriorate. On Monday, the USDA rated just 60% of the corn crop good-to-excellent. That’s well below the 74% rating from the same period in 2016.

Soybean Prices Crater 

New-crop November soybean futures contracts fell to their lowest levels since June after the WASDE report. The USDA hiked its production and yield expectations in the U.S. and left expectations for major South American producers unchanged.

The August soybeans contract fell 32.75 cents to close the day just below $9.31. Meanwhile, the September futures contract dropped 32 cents to close at $9.34. The new-crop November contract shed 33 cents to close the day at $9.40.

This was a big swing as these contracts traded about 10 cents higher before the release of the report.

Analysts had expected the agency to cut soybean yields from 48.0 bu/ac in July to 47.5 bu/ac in August. Instead, the USDA raised the number to 49.4 bu/ac. The agency also pegged total production at 4.38 billion bushels, which would be a record crop size.

The agency also said that global soybean stocks have been increased from 93.53 million metric tonnes to 97.78 million metric tonnes.

Looking to South America, the USDA set Argentina’s 2017 harvest at 57.8 million metric tonnes and its 2018 output at 57 million metric tonnes.

In Brazil, the numbers are higher. The agency pegged the country’s 2017 harvest at 114 million metric tons and its 2018 harvest at 107 million metric tonnes.

The WASDE report overshadowed soybean export figures. The U.S. exported 684,300 metric tonnes for the week. That was within the range of 350,000 to 950,000 metric tonnes.

Wheat Prices Slump after Surprise Report

The USDA forecasted that all wheat production would come in at 1.74 billion bushels. That was high compared to analysts’ expectations, but down from its July figure of July 1.76 billion.

In Chicago, the September SRW wheat contract dropped 19 cents to close at $4.405.

The number that surprised the most as the spring wheat figure: 401 million bushels. That was down from July’s 423 million estimates, but still well above expectations from analysts.

In Minneapolis, the September spring wheat contract dropped 26.25 cents to a notch below $7.08. In Kansas City, the September HRW contract fell 15.5 cents to close just above $4.48.

The USDA also reported that exports for the week totaled 464,300 metric tonnes. That figure surpassed high-end expectations of 400,000 metric tonnes.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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