Chicago Board of Trade Market News
Outlook: USDA will update their acreage and production estimates on Monday 12 August and a substantial level of bearish expectations is already built into present futures prices. The large short position currently held by speculators is evidence that many traders anticipate that Monday’s data can drive prices even lower. This may be correct if USDA releases a yield estimate over 160 bushels per acre that produces total corn production above 14 billion bushels and ending stocks well above 2 billion bushels.
Monday’s data will be based upon field surveys by NASS to determine USDA’s state-by-state yield estimates and those results do not have an extremely strong correlation with the contents of the weekly Crop Progress reports. The average expectation from analysts is for USDA to increase their yield projection from 156.5 up to 157.7 bushels per acre. However, uncertainty is indicated in the range of analyst estimates from a high of 161.2 down to a low of 155.1 bushels per acre.
Favorable weather conditions lessen the prospect that the yield estimate will be lower than the current estimate of 156.5 bushels, but it is not entirely impossible. USDA focuses on accuracy and they will relay whatever the field data indicates. Data for the weekly Crop Progress reports is not obtained in such a rigorous format.
The most recent weekly Crop Progress report classified national average corn conditions as 64 percent good to excellent and that is above the five-year average (and last year’s drought-ridden conditions) but still below the 2010 conditions when the average yield was 152.8 bushels. The 1 percent increase to 64 percent in corn conditions occurred as improvements in seven states, particularly Illinois, offset declines in nine other states and unchanged ratings in two others. It will be interesting to see what the more extensive field survey data indicates on Monday.