’Twas the Night Before WASDE

Well, it may upset you tomorrow—or maybe not—but we have another WASDE Crop Production Report coming out. The estimates I’m focusing on are the ones that could really make a difference in what this market does tomorrow.

It’s not so much about yield. Everybody is pretty much in agreement that corn yield is coming down, with the average estimate around 178.4 bushels per acre. Even StoneX—the high-water-mark guessers—came down about two bushels per acre. Soybeans are estimated around 52.5 bushels per acre.

But the bigger question is: What does USDA do with these carryout numbers tomorrow?

The average guess has USDA coming in around 1.520 billion bushels for corn carryout, but demand could be what surprises everybody. USDA has to catch up with old-crop demand, push that through to new crop, and then try to justify new-crop demand falling substantially from old crop.

We know Europe is going to have to buy a lot of corn—potentially around a billion bushels—and we could probably capture 300 million bushels of that. So, there’s really no reason to dial back U.S. corn usage by 300 million bushels.

Between ethanol, domestic use, and exports, we could still utilize around 16.2 billion bushels. That means this carryout number could continue moving lower. Based on the average guesses, I believe we could see it around 1.48 billion bushels tomorrow, potentially on its way toward 1.2 billion.

That’s what could continue pushing corn higher.

For soybeans, the estimate going into the report is around 292 million bushels. That could surprise the market, too. Demand remains strong and solid, while yield could come in at 52.5 bushels per acre or lower because of the poor finish we’re seeing across a lot of the soybean crop.

Everybody is focusing on yield—and yes, yield is important—but don’t overlook the demand side and what it could do to these carryout numbers.

Wheat carryout could also start coming in below roughly 720 million bushels. But wheat is the tail of the dog right now, as everybody continues chasing headlines over whether there will be peace between Russia and Ukraine. I don’t believe that’s going to happen. They’re likely going to continue fighting through the winter.

Do a seven-day trial and see what we have to say tomorrow after the report. And if you like seeing this kind of market data, make sure to like and follow us.