U of I's Good Offers Insights on Latest Production Forecast
University of Illinois Ag Economist says the market reaction to the latest USDA crop production forecasts suggests the market had priced in the risk of even larger production forecasts. The department's October forecast of the U.S. corn crop was about 100-million bushels larger than the average trade guess. The soybean forecast was about 90-million larger than the average trade guess. The next yield and production forecasts will be released November 9th. Good says some variation from the October projections should be expected. He says history suggests a slightly lower yield forecast for corn and a slightly higher forecast for soybeans.
In the previous 30 years - Good says the U.S. average corn yield forecast declined in September and again in October - as it did this year - in seven years. In five of those seven years - the November yield forecast was below the October forecast. The decline ranged from 1.5 to 7.2-bushels and averaged 3.2-bushels. For the two years with an increase in November - the increases were less than half a bushel. In cases where the soybean yield declined in September and increased in October - as was the case this year - Good says the November yield forecast exceeded the October forecast six out of seven years. The average increase was half a bushel.
According to Good - the November production forecasts will provide a clearer picture of the availability of corn and soybeans. But he says prices will now take direction primarily from the ongoing rate of consumption.
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