At mid-day on Thursday, the USDA will update U.S. corn and soybean production numbers and will also estimate the impact the current trade war with China will have on demand. The market sold off sharply going into Thursday’s report. Tom Fritz, with EFG in Chicago, says the yield estimate for corn will be a number to watch, “The USDA will employ the new acres they gave us at the end of June. So harvested acres will be up by over a million. If they leave their yield estimate the same, you will see an increase of 174 million bushels.
Fritz says the world corn supply number will also be one to watch, “There are many places around the world where the corn crop is not doing very good.” He told HAT this number could produce a surprise to the market and added the market believes that the U.S. corn crop is made with no major cuts in yields likely.
As for what the USDA will say about how much soybean demand will be lost because of our trade issues with China, Fritz says it is anyone’s guess, “The supply/demand sheet will show an increase in soybean production because of the higher acreage number, but the big question is how will the USDA adjust the demand number to account for the trade dispute with China.” Fritz said either higher or lower the market will likely have a big reaction, “We will either kill it and set new lower for a while or we will see a knee-jerk reaction to the upside like we saw last Friday.” One thing is for sure, it will be a very interesting market day on Thursday.