Soybean yield surprise sends futures sliding — USDA report highlights

Soybean futures took a 42-cent tumble on Friday after the USDA surprised the market with a 51.6 bushel/acre yield estimate for the U.S. crop — approximately two bushels higher than the average trade guess.

The projected yield increase translated into a record 785 million bushel carryout projection (up from the department’s 580 million bushel estimate in July), as illustrated by Karen Braun of Reuters in the tweet below:

Here’s some perspective on what happened with U.S. #soybean ending stocks today. USDA projected a record 785 mln bu carryout in 18/19, well above the current record 574 mln bu in 06/07. The largest number USDA has ever printed (that I can find) was 655 mln bu for 06/07 in Jun 06. pic.twitter.com/I7qAFeYUDO

— Karen Braun (@kannbwx) August 10, 2018

Much of the attention in the soybean market lately has been focused on demand, with China implementing its tariffs on U.S. beans. The USDA only made a slight adjustment to its soybean export forecast, raising 2018-19 exports by 20 million bushels, while leaving Chinese imports unchanged at 95 million tonnes.

The corn yield estimate was also higher than the average trade estimate, but not quite as stunning as the soybean yield estimate, landing within the range of pre-report guesses at a record 178.4 bushels per acre (up more than 4 bushels from July). As a result, 2018-19 U.S. corn ending stocks were pegged 1.68 billion bushels, versus the USDA’s July estimate of 1.55 billion.

New crop corn futures in Chicago ended trade on Friday down around 11 cents/bushel.

Global 2018/19 #Grain Ending Stocks:
– #Corn above July and trade estimates.
– #Soybeans… yaaaaaaa….
– #Wheat decrease from July but higher than expected. #OATT pic.twitter.com/cGGnnF4Ui7

— Matthew Pot (@MatthewPot) August 10, 2018

For wheat, the surprise was in how little change there was to global production estimates versus the USDA’s July report, in light of hot and dry weather in major growing areas over the past month.

The USDA pegged global wheat ending stocks for 2018-19 at 259.0 million tonnes, down from 260.9 million in July, but the trade was expecting a number closer to 256 million.

EU wheat production was reduced by 7.5 million tonnes, while Russian wheat production was bumped up by 1 million, but Australian, Canadian, Ukrainian and U.S. spring wheat production estimates were left unchanged. Canada’s wheat crop was pegged at 32.5 million tonnes.

After rallying for the last three weeks on weather concerns, spring wheat futures in Minneapolis saw a 21 cent/bushel correction lower on Friday.

The August World Agricultural Supply Demand and Estimates (WASDE) was the department’s first survey-based report of the season, with survey taking place in July.

It was also the first report where the USDA did not give any media outlets embargoed access to the numbers prior to the release at 11 am CDT.

The next WASDE report will be released on September 12th.