Reactions to August WASDE and Today’s Grain Selloff

The August WASDE Report released at noon on Thursday revealed that the government will always break your heart.

Pooh

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

They also expected that soybean yields would be cut from 48.0 bu/ac in July to 47.5 bu/ac in August.

Based on Twitter reactions… those expectations fell short.

Nothing

The USDA cut its yield expectations for the corn crop to 169.5 bu/ac. 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.

Corn futures contracts, were trading higher at the Chicago Board of Trade before the announcement, immediately reversed. By 12:02 pm EST, the September corn futures contract was down 10 cents to $3.62.

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Soybean yields were a different story.

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The USDA increased its yield expectations to 49.4 bu/ac.

Five minutes before the release of the WASDE report, soybean futures contracts were up double digits. The September contract was trading up 10.25 cents at $9.76.

By 12:02 pm, after the announcement, that same contract was off 19.25 cents at $9.46. That was a 30-cent swing in seven minutes.

But it wasn’t the only the yield number that stood out.

First, soybean production was pegged at 4.381 billion bushels, topping consensus estimates of 4.212 billion.

And then… there’s the growing glut around the globe.

World soybean stocks have been increased from 93.53 million metric tonnes to 97.78 million metric tonnes.

By 12:30, the September soybean futures contract was off about 25 cents. Which means we saw a bigger swing within a half hour.

Swing

Naturally, not everyone trusted the data.

Libertarian

While others want answers…

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Wheat prices weren’t immune from a selloff either. The September contract in Chicago was off 1.75 cents ahead of the report.

The bearish WASDE report pushed that contract down more than 8 cents at $4.62 at 12:01 p.m. EST.

Canola, spring wheat, and hard red winter wheat contracts also slumped after the report.

Of course, it wasn’t all bearish news in the wheat markets…

Wheat

How is the broader sentiment after this report?

One picture… one thousand words.

Dukes

But the USDA has signaled to the markets that lower prices are here to stay for a while. For that reason, it’s important that producers have options to shop around their grain and find the best deal possible.

If you’re looking for the best price available, be sure to post your grain on FarmLead and get access to more buyers from outside your traditional network.

Best of all, it’s free to post.

Here’s a recap of the numbers from the report.

2016/17 Carryout 

The U.S.D.A’s August estimate for corn was 2.37 billion bushels. The average estimate was 2.386 billion.

The agency’s estimate for soybean carryout was 370 million bushels, which was far less than the 401 million consensus estimate.

2017 Corn Yields

The August corn yield sits at 169.5 bushels per acre. The range of estimates fell between 162.8 and 168.5, so this was outside of the central range of analyst expectations.

Meanwhile, soybean yields were increased from 48. bu/ac to 49.4 bu/ac. The range of estimates fell between 46.9 bu/ac and 48.0 bu/ac. Once again, a surprise from the USDA.

2017 Production Estimates

U.S. corn production was pegged at 14.153 billion bushels. The range of estimates fell between 13.59 billion and 14.07 billion. The USDA figure was still below the 14.255 projected by the agency in July.

U.S. soybean production estimates were increased from 4.26 billion bushels to 4.381 billion bushels. The uptick was well above the range of estimates (4.165 billion to 4.307 billion).

2017/18 Carryout

The agency cut its estimate for the new calendar carryout for corn from 2.325 billion to 2.273 billion. The average projection from analysts was 2.003 billion.

The U.S.D.A raised carryout expectations for soybeans from 460 million bushels to 475 million bushels. Average expectations from analyst called for 424 million bushels.

Finally, wheat carryout was lowered slightly, from 938 million bushels to 933 million bushels. That figure is still well above the 907 million bushels projected by analysts. That helped press wheat prices down after the report.

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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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