USDA Corn Yield Cuts May Not Mean What Traders Think

When the U.S. Department of Agriculture (USDA) cuts corn yields consecutively, traders often assume a third cut is coming.

However, according to Mike Castle, Senior Commodities Economist at StoneX, this assumption may be misplaced.

Castle points out that in only four of the previous 15 years did both August and September WASDE reports carry corn yield cuts. Of those, two saw the first reduction arrive on the July report instead, which changes what the sequence means.

Narrowing to the years where the first cut arrived in August leaves a much shorter list, and it's this smaller set of analogs that points toward a supply side close to settled rather than one still unwinding.