Watch USDA’s WASDE Report, Hurricane Irma, and China’s Soybean Imports

COMMODITIES

USDA Will Likely Cut Corn & Soybean Yields:

There is a strong chance that US corn and soybean yields will be cut by the USDA on Tuesday. The department has cut corn yields 50% of the time by an average of 2% in the September report over the past 20 years. Recent good-to-excellent ratings for corn and soybean imply a lower yield outcome than the USDA’s August projection. However, Gro’s Yield model, which is driven by frequent scans of environmental and vegetation conditions, has jumped to 170.6 bu/ac in the past week. This is more bearish than the USDA’s current forecast of 169.5 bu/ac and significantly more so than most private forecasts. Traders can now perform scenario analysis of potential outcomes on Tuesday with Gro’s new interactive balance sheet feature.

COMMODITIES-WEATHER

Hurricane Irma Spells Trouble for Regional Crops:

Hurricane Irma crashed through the Caribbean and landed in Florida with up to category 4 force winds this past weekend. Orange juice futures spiked on fears that high winds will cut tree production in Southern Florida. Weather damage may impede sugarcane planting in the region. US food wholesalers are also concerned about asparagus shortages in the coming weeks due to airfreight delays between Peru and the US. A more immediate concern for traders is the impact on standing cotton and soybeans in the Gulf states. We encourage traders and food companies to monitor daily rainfall patterns across key regions in Gro. Both orange and cotton futures are susceptible to corrections. In fact, orange futures have historically delivered poor returns after hurricanes—Hurricane Wilma in 2005 being the one major exception.

TRADE

China’s August Soybean Imports Slow:

Chinese year-to-date soybean imports through July soared by 16.8% y/y. Strangely, the USDA’s Beijing bureau is reporting that domestic soybean stockpiles are building. Expanding domestic production is also adding further to ending stocks. In turn, Dalian soymeal futures have plunged to a 14-month low. Soy processors struggle to remain profitable as a result. Forward US new crop soybean sales to China have dropped 40% below year ago levels. This is leading the USDA attache to trim China’s projected imports for 2017-18 to 92.5 million (1.6% y/y) tonnes. That’s still a record high but below the USDA view of 94 million (3.3%). Traders can monitor this potential bump in the road with Gro.