Last year to this date, Chicago corn futures Cv1 jumped more than 5%, ending the limit after the USDA cut the 2020 U.S. corn yield. report day in the previous four January months were less than 1% each.
Sv1 soybean futures jumped more than 3% a year ago with further confirmation of multi-year supply lows, although, like corn, the previous two years featured fractional price changes.
On Tuesday, the most active CBOT corn and soybean futures finished 22% and 1% respectively above last year’s “report day eve.” Soybeans at $13.86-1/2 a bushel is about the highest on record to date, while corn at $6.01 is a nine-year high.
Analysts forecast USDA U.S. corn ending stocks for 2021-22 at 1.472 billion bushels, down 1.4% on the month, and soybeans at 348 million bushels, up 2.4%. These adjustments would be relatively slight, but lighter changes have occurred, most recently in 2020.
If US equities are not a surprise, one reason may lie in the recent calm in quarterly US equities. The last two December 1 stocks reports had huge revisions to September 1 corn stocks, spoiling the January trade estimates for December 1 and ending stocks.
But the September and June 2021 reports showed almost negligible adjustments from the previous quarter, perhaps suggesting that the estimation process is under control. Nevertheless, traders should always be prepared for the unexpected when it comes to stocks.
U.S. corn yield is unchanged from November at a record 177 bushels per acre, while soybean yield is seen up 0.1 bpa to 51.3, the second highest on record. The range of yield estimates for corn is quite wide, but the narrow range for soybeans and recent trends in forecasts could create failure there.
The set of USDA reports are due Wednesday at noon EST (1700 GMT), and other key numbers to watch include drought-hit South American corn and soybean crops. It’s still relatively early in the growing season, so the agency can make smaller cuts at this point.
Trade is looking for US winter wheat plantings at their highest level in six years, although if acres don’t meet expectations, it frees up more acreage for spring crop seeding.
GREATER OR SMALLER YIELDS
Recent history suggests that trade is likely to miss January’s US corn yield by more than a bushel per acre. Over the past decade, the trade guess was within 1 bpa of reality only three times. Last year was the biggest loss in some time, with the corn yield 3.3 bpa below the analyst average.
Over the past two decades, January corn yield has tended to fall outside the range of trade estimates at least half the time, most recently for the 2020 and 2018 crops, and yield has fallen downward. both times.
The direction of corn yield from November to January has been mixed in recent years, with reductions for the 2020 and 2018 crops and increases for 2019 and 2017. Yields from 2013 to 2016 were all lower than November with an average reduction of 0.8%.
The performance of US soybeans was much less surprising in this report, as the yield fell outside the trading range only once in more than a decade. This was for the 2019 crop, as the yield landed 0.2 bpa above the highest estimate.
An out-of-range result is possible because soybean yield ideas vary by just 1 bpa, with a high of 51.9 and a low of 50.9. Based on recent statistics alone, traders might overestimate the return.
January’s soybean yield has fallen below November’s in five of the past six years, and the trade has also topped January’s yield in the same five years.
If analysts are correct on the soybean yield, it would mark the smallest percentage change from November in 14 years. The corn yield has not remained unchanged in January for more than a quarter of a century.
Karen Braun is a market analyst for Reuters. The opinions expressed above are his own.
(Editing by Matthew Lewis) (([email protected]; Twitter: @kannbwx))