The U.S. Department of Agriculture (USDA) released a seemingly bearish World Agricultural Supply and Demand Estimates (WASDE) report on Friday, raising production estimates for corn, wheat, and soybeans.
AgResource Company president Dan Basse says on closer inspection of the WASDE report, it may not be as bearish as you'd think, pointing out that while corn futures in Chicago dropped eight or nine cents on Friday following the report, prices moved back throughout the day, closing up just over a penny.
Looking particularly at corn, Basse thinks the report's forecast on yield is too high: the USDA projects corn yields will average out at about 175.1 bu/ac. Basse notes the USDA used an ear weight of .36 pounds per ear, which would surpass the 2004, 2014, and 2009 time frames.
"We think that's way too high of an ear weight," Basse says. "Normally what the USDA does in the August report is utilizes a five-year average, which if you would've done that this year, it would've given you a corn yield that's about 10 bu/ac lower — 165 (bu/ac). We think that's a little too low, but to us, if the ear weight comes down, as we would expect, and (as it) matures and it dries down, we think you still end up with a corn yield of 168 to 172 (bu/ac)."
Source : Portageonline