Chicago Board of Trade (CBOT) agricultural commodities closed higher over the trading week which ended Aug. 10, with soybean futures dropping over 4 percent, after the U.S. Department of Agriculture (USDA) raised its outlook for yield and production in its monthly crop report.
The most active corn contract for December delivery fell 12.5 cents weekly, or 3.25 percent, to 3.7175 dollars per bushel. September wheat delivery went down 9.5 cents, or 1.71 percent, to 5.4675 dollars per bushel. November soybeans dropped 40.5 cents, or 4.49 percent, to 8.6175 dollars per bushel over the week.
On the week, CBOT corn futures fell over 12 cents, all of which occurred following Friday's bearish USDA World Agricultural Supply and Demand Estimates (WASDE) report release. USDA in its first estimate pegged U.S. corn yield at 178.4 bushel per acre, a new record. This is also well above what was expected in the August report.
A weaker close was warranted. However, Analysts note that the world corn balance sheet was little changed via record U.S. yield. World major exporter stocks and use remain tight. And yield changes from July to August are poor indicators of changes thereafter.
Wheat futures fell sharply on the week, both in the U.S. and Europe. The break was driven entirely by higher than expected U.S. corn and soybean yields presented in USDA' s August report.
Wheat data on Friday was perhaps not as bullish as expected, but some measure of EU and Black Sea export rationing still lies ahead. Major exporter stocks and use was lowered fractionally in the August WASDE.
And objective U.S. spring wheat yield surveys won' t be included until September. USDA's current U.S. spring wheat yield forecast is record large. Finally, funds hold a near record large long position in Chicago, and so a correction was due.
However, interior cash prices in Russia are rising quickly as harvest ends. The next leg of the bull market will be driven by exhausted surpluses in the EU and Black Sea, and a substantial shift in world demand to the U.S. This will occur in late 2018.
Soybean futures collapsed in late week trade on bearish USDA reports. USDA estimated the U.S. soybean yield of 51.6 bushels per acre, up 3.1 bushels from WASDE' s July forecast, and the largest August forecast on record.
WASDE analysts increased their estimates for crush and exports amid larger supplies but could not offset the significantly larger yield figure.
Year end 2018/19 soybean stocks swelled to a record large 785 million bushels. The trade has been discussing large yield potential for weeks but seeing the big supply numbers in print sent the market sharply lower.