Brokers question USDA corn, soy data as too low

Brokers are pointing to kernel size data as offering the scope for further upgrades to official estimate for the US corn crop, after a high-profile report which has attracted comment on soymeal exports too.

The US Department of Agriculture on Tuesday, in its monthly Wasde report, raised its estimate for the domestic corn yield, but by 2.1 bushels per acre to 167.4 bushels per acre, less than half the amount that analyst had expected.

However, the apparent underestimate is down to crop measuring methodology which will be corrected as the crop ripens and shows further benefits from conditions deemed ideal for much of the Midwest, broker said.

While the USDA yield estimate incorporated a record figure for the number of ears of corn per acre, of about 28,600, it used an average ear weight below the all-time high, set in 2004.

"There is a widespread sentiment among market participants that subsequent yield surveys will find more bushels based on heavy ear weights," CHS Hedging said.

'The real jewel'

In fact, it is at the level of the kernel in terms of average weight and number per ear that a large benefit from benign weather will be felt, but which is as yet only detectable in the far south of the US, where crops are better developed.

"The real jewel of this year's corn is the incredibly successful pollination," said Allendale, the Chicago broker.

"That won't be reflected until the September or October [Wasde] reports."

As for the impact that could have, according to Brian Roach at broker Roach Ag, "we can say there is potential that the US corn yield could end up somewhere between 172-174 bushels per acre".

That assumption is based on factoring the record 2004 ear weight, of 0.351 pounds apiece in the 10 states studied by the USDA, into the equation, which gives an average yield of 179.3 bushels per acre, with some adjustment for results from other areas.

'Stunning surprise'

Corn futures for December held steady at $3.69 a bushel in Chicago on Wednesday, having reported a marginal increase in the last session, on the lower-than-expected yield figure.

Soymeal futures for December managed a small gain this session, of 0.2% to $344.10 a short ton, helped by ideas that the USDA, in its Wasde report, may have underestimated demand potential.

"USDA report days are becoming more and more known for a stunning surprise that leaves market in tatters," Kim Rugel at broker Benson Quinn Commodities said, terming the biggest shock this time in the soy complex estimates, and the failure to upgrade the forecast for US soymeal exports next season from 10.7m tonnes (11.75m short tons).

In fact, the US has for 2014-15, which begins in October, sold forward exports of 4.14m tonnes of soymeal. A year ago, it had sold ahead 1.45m tonnes for 2013-14.

At Citigroup, Sterling Smith also highlighted the soymeal export said surge, which has said questioned a USDA decision to stick by a US soybean crushings forecast of 1.76bn bushels.

"We do take issue with lack of changes in the crush numbers in light of the very strong soymeal exports," he said.

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