On Friday morning, the USDA released their monthly report stating that U.S. corn production will be reduced by 13% to 10.779 billion bushels. A price drop after a number like this simply does not make sense. Analysts expected a corn yield of 127.3 bushels per acre while the surveyed number was 123.4, a significant drop from July’s number of 146 bushels. A drop in expectations like this should cause a rise in corn prices. Apparently traders are taking this time to cover their positions before markets continue to rise. Markets have shown that supply is low. I think that markets will continue to slowly rise as this year’s crop is harvested. Soybeans were reported to have a yield of 2.692 million bushels, the lowest in 9 years.
Wheat estimates came in stronger than expected at 74.67 million bales, causing a pullback in wheat prices. As of Monday, wheat prices have lost 4% since the USDA data release.
In my opinion this year’s grain markets will remain strong. Although wheat is having a pullback, yields are still low for the year across the grains markets and in many analysts’ opinions, it is too late to fix damaged crops.
David Cornes holds a degree in economics from the University of Montana.
