USDA's 11 September crop report was mostly a non-event for the markets despite a headline cut to corn yields, market analyst Bryce Knorr writes in Farm Progress. December corn traded a 20-cent range after the government trimmed production by more than 200 million bushels, then closed lower and left a bearish reversal on the charts.

The national corn yield was set at 178.5 bushels an acre, 2.2 bushels below the August survey and, Knorr says, exactly what his model built from satellite Vegetation Health Index maps had predicted. The soybean yield of 52.8 bushels moved only a tenth of a bushel and also matched the satellite trend, yet November futures ended 35.75 cents lower after briefly rising.

December corn peaked just under $5.45 and closed at $5.32, inside the top third of Knorr's projected selling range of $4.98 to $5.33. His own balance sheet uses a yield of 175.6 bushels, cuts nearly 275 million more bushels from production and assumes rationing will trim demand by 640 million, leaving ending stocks on 31 August 2027 around 1.6 billion bushels. USDA raised its season-average cash price forecast by 30 cents to $4.80; his model sees less of a bounce, and he notes yields anywhere from 173 to 190 bushels are still possible.

November soybeans peaked at $13.3525, a few cents short of the top of his selling range. His model assumes production below the government's figure and rationing limited to crush because the energy and biodiesel outlook is uncertain — leaving aside China, which he calls the 500-pound elephant. The latest export sales report showed China's bookings matching 40% of last year's total, well on the way to meeting its trade-deal commitments. Beijing's fertiliser purchases are up 48% as it limits coal-based nitrogen production, while its crude and refined product imports are down 15% or more.

The bigger risk in the week ahead is monetary. With Iran stepping up attacks and the Consumer Price Index up 3.4% in August, fed funds futures priced in a quarter-point increase at the Federal Reserve's 15-16 September meeting, taking the target to 3.75% to 4%, despite the Trump administration's calls for lower rates. Midterm elections less than two months away add pressure on the central bank to act now, Knorr says; Wall Street could take a hike in stride, barring a major sell-off that spills into commodities.

Source: Farm Progress