Investors Can't Stop Talking About USDA's Bombshell Report

Markets are sure sagging greatly after our spring rally on the horrible planting conditions. That is interesting. Yesterday USDA’s August report cut corn/bean planted acreage another 5 million acres (mostly beans) – and the corn market went limit down! From the market’s perspective, it rallied greatly during the difficult planting season, and when the weather cleared up, it started to drop. Realistically, the Pro Ag yield model for corn has risen 9 bushels per acre since 6/24/19, which would represent 700 to 750 mb increased production of corn. That alone is enough for the corn market to go down, and down it did go. Even though we are still wrangling over how many acres actually were prevented from planting (USDA-FSA said 19 million acres so far), the market seems done trading that old news. Instead, it’s trading new news (the improved crop conditions). Even in yesterday’s report, where USDA had 2 million more acres of corn than expected, it was the 3.5-bushel-per-acre yield hike that hurt the market the most. What will likely be even bigger news will be our first frost date: When will it come, and how much crop will it damage? As late as millions of acres of corn/beans were planted, even a late frost will bring some yield loss. USDA, yesterday, took the market by surprise with another huge shift in acreage from soybeans to corn (about 3 million acres), which in August is quite late to report on. The shift is disguised in a remake of prevent-plant acres, but it is there for all to see. Essentially, USDA is saying that farmers ‘corrected’ the market shortage of corn by simply stealing acreage from soybeans (where stocks were already plentiful). Then they also slashed demand for both corn and soybeans, mainly over the Chinese new preference to buy all their needs from South America and the FSU countries of Russia and Ukraine instead of the U.S...MORE