By John DePutter & Dave Milne – November 13, 2017
“Thursday’s USDA supply-demand update pegged the average corn yield at a record high 175.4 bu/acre, up a major 3.6 bu from the October estimate and easily blowing past the average pre-report trade guess that had the yield at just 172.3 bu.”
– Syngenta website, Nov. 9, 2017
What it means:
We’ve already got a taste of what it means and it isn’t good for corn prices.
After chopping mostly sideways since September, corn futures broke out of their range to the downside with the news. Futures staged a small recovery the following day but there’s no doubt this yield estimate is going to linger as a negative market factor.
Obviously, the market would be higher than it is today if not for such a great yield.
Looking ahead, maybe the market will rally despite the news of a potential record yield. Maybe most of the bearish news is priced in to the market. However, the fact is, any rallies that do manage to take hold this fall and winter won’t be as strong as they would have been with a smaller crop.
Perhaps more than anything, the yield estimate – if indeed accurate – serves notice that we have entered a new realm in terms of production capability. The weather this past summer was nowhere near ideal in many areas of the American Midwest, including the top production state of Iowa where it was overly dry in places. Yet, here we are, with a potential new record yield on our hands, topping the previous high of 174.6 bu/acre achieved in 2016.
Speaking as part of MGEX-sponsored crop call, market analyst Brian Hoops agreed the USDA’s yield estimate was ‘hard to make sense of,’ especially given the just-mediocre condition ratings the corn crop chalked up throughout the growing season.
Somewhere along the line, it seems, we’ve just got a whole lot better at growing corn. Whether it’s better genetics, better management, or a combination of the two, it’s clear farmers are not just meeting the challenge of feeding a hungry world, but exceeding it.
If an average yield of 175.4 bu/acre is what we get in just a so-so growing season, then imagine what we’ll see if the weather tilts to the better side.
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