Takeaway

The presenter's core view is that the market has already priced in a lower corn yield ahead of the September WASDE report, the first to use objective field data. The key risk is a bearish market reaction if the USDA's number isn't lower than the pre-report estimate of 178.4 bushels per acre. Post-report, the speaker believes the market's focus will shift from supply to demand for both corn and soybeans.

What the presenter said

• The September WASDE and crop production report will focus on yield. [00:07]
• This is the first WASDE report where the USDA uses objective field data. [00:12]
• The average pre-report estimate from Reuters for corn yield is 178.4 bushels per acre, down 2.3 bushels from August. [00:29]
• This expected drop is due to weather extremes in August and early September that challenged the corn crop. [00:37]
• Lower crop ratings, not just in the northern plains and western Corn Belt but across the entire Corn Belt, indicate a deteriorating crop. [00:57]
• The presenter states the market has already been trading a lower corn yield around 177 to 178 bushels per acre. [01:10]
• If the WASDE report's corn yield comes in at 178.4 bushels per acre, the market could be disappointed and react negatively. [01:17]
• For soybeans, not much change in yield is expected; the average trade guess is 52.5 bushels per acre, a slight decrease of 0.2 bushels from August. [01:33]
• The presenter believes demand will become a more significant market driver than supply for both corn and soybeans after the report is released. [01:55]

Trade ideas

None stated. The presenter summarised the market view that corn yields are expected to be lower while soybean yields are not expected to change much, with demand becoming the primary focus after the report.

Levels and data cited

• Corn Yield (Reuters pre-report estimate): 178.4 bushels per acre
• Corn Yield (Market expectation): 177 to 178 bushels per acre
• Soybean Yield (Average trade guess): 52.5 bushels per acre
• Data Source: USDA crop ratings were cited as being lower recently.

Risks and what would invalidate this

• The presenter notes a risk of market disappointment and a negative reaction if the official corn yield comes in at 178.4 bushels per acre, as the market has already priced in a lower number.