AUDIO: Jim McCormick, Allendale Inc.
The National Agriculture Statistics Service surprises traders by raising corn and soybean yields.
In this month?s World Agriculture Supply and Demand and Crop Production reports, the U.S. corn yield is expected to average 169.9 bushels per acre, up 0.4 bushel from the August forecast but down 4.7 bushels from 2016.
?It was not what the trade was expecting. Just like last month, the trade was anticipating due to the weather conditions we?ve had the last 30 days, the crop to shrink back a little bit,? Allendale Senior broker, Jim McCormick says. ?Trade was guessing the national corn yield was going to fall from a 169.5 last month to closer to 167.8 this month.?
This could be the third highest yield and production on record for the United States. Area harvested for grain is forecast at 83.5 million acres, unchanged from the August forecast but down 4 percent from 2016. Corn production is forecast at 14.2 billion bushels, down 6 percent from last year but up less than 1 percent from the August forecast.
It?s the same story for beans.
?A month ago, the government estimated a national bean yield at 49.4. Trade was guessing it would shrink back to 48.7 due to the current weather conditions the last couple weeks. Instead, they put it at 49.9, the upward provisions are why you are seeing dramatic selloff in the grain markets,? McCormick says.
Production is forecast at a record 4.43 billion bushels, up 1 percent from August and up 3 percent from last year. Area for harvest in the United States is forecast at record high 88.7 million acres, unchanged from August but up 7 percent from 2016.
McCormick says he?s already heard from frustrated farmers. He adds be optimistic.
?In the long run, commodities are cheap. In the big picture, we have corn trading at good value which is what we want to see. You get cheap value in the long run along with a weaker dollar, that brings demand in. You build your demand base and could bring a long-term bull market multiple years out,? McCormick says.
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