Traders ‘race’ to cut US corn yield estimates

A "race" among traders to cut estimates for US corn yields is prompting talk of the worst result for nine years, on the eve of the results of a crop tour expected to throw extra light on the harvest potential.

"Yield forecasts are now a race to the bottom," US Commodities said, adding that the market appeared to have factored in an estimate of 148-149 bushels per acre.

"It is true the blowtorch heat [largely in July] did major damage across the Corn Belt," the broker said.

However, many other analysts believe that even bigger cuts from the official estimate, of 153.0 bushels per acre, are being talked about, after the ProFarmer tour of Midwest crops pegged the yield in Illinois, at 156 bushels per acre.

Illinois, America’s second-ranked corn producing state, last year achieved a yield of 165.7 bushels per acre.

‘The fear is…’

While the ProFarmer number for Illinois was "solid", it "is not enough to cover the expected losses in Indiana, Ohio, Missouri, Texas, Arkansas, Tennessee and Kansas", Matthew Pierce at PitGuru said.

"The fear is we are sitting on a national yield of 146-148 bushels per acre."

At Country Futures, Darrell Holaday said the market was "definitely below 150" bushels per acre, adding that "there is now discussion of a 140 yield", which would be the lowest since 2002.

Such downbeat talk "is normal as yield ideas deteriorate", he added, with "small crops get smaller" one of Chicago’s favourite adages.

Tour results

A yield of 140 bushels per acre implies a crop of less than 12bn bushels, factoring in US Department of Agriculture area numbers, well below levels being proposed by major banks and industry groups.

The International Grains Council on Thursday pegged the US crop at 325m tonnes (12.8m bushels), some 3m tonnes (110m bushels) below the USDA’s latest estimate but still implying a yield above 150 bushels per acre.

ProFarmer crop judges are expected later on Friday, potentially just after the close of Chicago’s grain futures market, to unveil final tour findings, after tours of the eastern and western Midwest united in Austin, Minnesota last night.

"In an attempt to piece the daily pieces of the puzzle together from their tour, it would appear that the number should come in lower than the USDA estimate of 153 bushels per acre," Jon Michalscheck at Benson Quinn Commodities.

Corn vs wheat

Separately, the Canadian Wheat Board overnight issued a reminder of the importance of the US corn crop in deciding wheat prices.

The board, the biggest wheat marketer, estimated the world wheat crop at 670m tonnes, "driving home the fact that there is no real shortage of wheat this year."

However, if the US corn yield "follows the industry’s lower expectations and production is less than 13bn bushels, corn prices will provide a floor for wheat prices by encouraging wheat feeding and, in the next production cycle, swap further acres from wheat to the more-profitable corn", the CWB said.

http://www.agrimoney.com/news/traders-race-to-cut–us-corn-yield-estimates–3527.html