The US corn market faces ongoing uncertainty as the US Department of Agriculture (USDA) prepares to lower its corn yield forecast, despite recent heavy rainfall in certain growing areas. Market participants eagerly await the monthly release of the World Agricultural Supply and Demand Estimates (WASDE) report on Wednesday, with the focus firmly on America's corn yield projection.
The year 2023 has witnessed a tumultuous combination of drought and torrential rains, causing significant fluctuations in the world's largest corn crop. Early June saw futures prices surge as the Midwest suffered from extreme dry conditions. However, subsequent record downpours provided a glimmer of hope and improved crop prospects, leading to the erasure of those earlier gains.
Although one might expect the USDA to revise its outlook upward due to the recent precipitation and the fact that farmers planted more acres than anticipated, the agency tends to be more conservative in its adjustments. Therefore, analysts anticipate a reduction in the USDA's corn yield view, averaging around 176.5 bushels per acre—a decrease of approximately 5 bushels per acre—according to a Bloomberg survey.
Considering the market's volatility throughout the year, this projected cut in the yield forecast is unlikely to bring stability to corn prices. It is probable that the USDA will need to revise its estimate in a future WASDE report, taking into account the expanded acreage planted by farmers.
However, the uncertainty surrounding the corn outlook persists as the growing season unfolds. With the return of heat expected in major corn regions by the end of July, the crop faces renewed challenges. As a result, the market is likely to remain volatile in the coming months, keeping market participants on their toes.
Source : wisconsinagconnection