How far off is the USDA?

first_imgShare Facebook Twitter Google + LinkedIn Pinterest The USDA increased the average national yield estimate to 175.  Some disagree with this estimate, saying the USDA is using record ear weight, which isn’t likely considering the intense summer heat throughout the Midwest. Others are questioning low population count estimates on the reports, which also doesn’t make much sense given the new seed technology options available to farmers. Right now I’m expecting the national yield to be above trend line, and a record yield is not out of the question. Next month USDA numbers will be based more upon actual field results.Farmers want to know if the lows are in for the year. I’m not sure if the low is in yet, but I expect we are getting closer. There is still a lot of old crop left to sell before harvest, which could pressure prices yet. The 15/16 carryout was around 1.70 billion and futures remained near $3.70 for most of the year. The new projected carryout for 16/17 is 2.4 billion bushels (30% higher); therefore I don’t expect a substantial rally until next summer. This may mean $3.40 to $3.50 over the winter after harvest is complete.While next year’s corn demand is expected to reach record levels, the record wheat and corn levels globally will be extremely burdensome. A supply disruption is needed. However, don’t expect farmers to reduce corn acres next year because there aren’t any other crops with much better returns based upon prices today.Beans showed the biggest percent increase in the August report. August weather has been good for beans so far, making record yields a possibility. There is about $1 per bushel downside risk right now. Soon South American planting intentions and weather will be the focus. Beans may be erratic for the next few months. More travellingThis week I was in west central Ohio. The USDA crop conditions report for Ohio showed 50% good/excellent and 20% poor. I agreed with this estimate, corn either looked really great or really bad. Most farmers I spoke with expected yields to be below normal, but not dismal. Beans showed the most signs of stress in Ohio compared to everywhere else I’ve been the past two weeks (Minnesota, Iowa, Nebraska and South Dakota).Once again, I travelled to Nebraska yesterday and corn and beans still look very good. A handful of corn fields (maybe 5%) showed signs of stress, but this was mostly on poor, hilly soil in western Iowa. I didn’t see any signs of bean stress. The fields showing the most stress were within 20 miles of my family farm in Beatrice, Neb.Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions. Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results. He can be contacted at [email protected]last_img

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