NAVIGATING THE USDA REPORT & DROUGHT
WEEKLY GRAIN NEWSLETTER
Here are some not so fearless comments for www.dailymarketminute.com
USDA Report
Was out on Friday and it was a non-event. Overall bearish on the surface with numbers printed that didn’t help feed the bulls at all.
Here are the numbers if you missed them.
As for price action from the report that too was similar to watching paint dry as we just didn’t move much. We did close most of the markets slightly higher than they were prior to the release of the report. But we didn’t do anything super special or harmful on the charts either.
What we did do is keep the bears in the game, heck we probably even added a reason for more bears to jump in the game. Meaning we added more confidence for those that are short the market to stay short, add shorts, or maybe even double up. I think that is false confidence that will give us even more upside in the future should Mother Nature not get wet.
A couple of good questions to ask yourself are.
What type of yield is already priced into the market. What type of yield is potential, possible, and probable? What is the present range of those yields?
So what are we going to be watching going forward? Other than weather updates several times daily?
Trends
Crop condition trends, weather trends, and demand trends will all be key. As will the #USDA update at the end of the month when we get updated acres and quarterly stocks. The quarterly stock trend has been one below estimates for a couple in a row for corn and beans with both January and March coming in below trade estimates. If that trend continues the USDA may be forced to drop old crop carryout in July or we should continue to see exports slow of old crop product because we just don’t appear to have it.
We have done a lot of comparisons to 2012 for several months. Many others have done comparisons to 2013. We are near the point when 2023 will do one of 3 things, follow 2013 price action and get cheaper, follow 2012 and get higher, or make its own path.
Below are some various screen shots coming from a 2013 report that talks about how the USDA came up with 2012 yield adjustments.
To sum it up, our July yield decrease came from very dry June weather. The article correlates a 2 inch deflect in precipitation in June for the 8 state region equals about a 20 bushel per acre yield decrease from yield models.
Here is what CHATGPT says is possible based on present drought conditions staying worse then 2012. It believes that we have a chance of…..
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Where AI thinks we could see yield come in at
What is possible if drought conditions stay the same?
Is 165 bpa yield possible?
How bad is the drought in the corn belt
Is the weather trend changing?
Comparing past drought years
History of when we make highs in corn
Should you have courage calls?
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