grain bins against blue skies

High uncertainty ahead of USDA’s August crop report


“Uncertain” and “unprecedented” are synonymous with Monday’s long-awaited USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE), which is set to include a revision of prior crop estimates from the June report. Many market participants are hoping it will provide clarity on the new crop balance sheet. 



Reuters released its poll of surveyed analysts ahead of the August WASDE with the poll indicating a decline in planted and harvested corn acres and a rise in soybean acres. Planted and harvested corn acres will be the focus on Monday. Market participants believe the USDA’s estimated planted corn acres are too high. Even the highest analyst estimates on Reuters, 89.8 million acres, is lower than last month’s USDA estimates at 91.7 million acres. Reuters average harvested acres estimate sits at 80 million acres, which is 3.6 million acres lower than July estimates. Reuters projects corn yield to hit 164.9 bushels per acre (bpa), which is down 1.1 bpa from USDA July estimates. According to Bloomberg, analysts are more uncertain this year about the amount of U.S. corn planted than any other year on record. While there is some hope for clarity around planted acres, yield remains unanswered. It is difficult to put a number on yields because the crop is still in earlier stages of growing. Most expect yield numbers to drop, expecting the late planting pace to take a toll on growing prospects.



Planted soybean acres are projected to rise, according to Reuters’ poll. Average soybean estimates are at 81 million acres, down 1 million acres from the USDA’s July estimates. Average trade estimates for harvested soybean acres sit slightly above July’s estimates at 79.9 million acres. The market is expecting acres to be slightly higher because farmers likely planted more soybean acres after corn plantings were delayed.


Bottom line

One aspect we can expect on Monday is high volatility. The corn market appears to have significant holes in the order book for sales above the market. Lack of market liquidity could lead to a volatile market jump on any USDA numbers that are outside of current market estimates. Bottom line, many traders don’t know what to expect as this feels like uncharted territory.