USDA Report Surprises with Lower Yields and Tighter Balance Sheet

The USDA's August WASDE report surprised traders on Wednesday by releasing lower yields and more acres for corn and soybeans, resulting in a tighter balance sheet.

Mike Zuzolo of Global Commodity Analytics said that this year it is 'a good year to take the numbers at face value' due to a change in USDA's modeling structure that incorporated more survey responses and data from other agencies. He noted that private estimates were climbing towards 184-185 bushels per acre for corn, but the actual number was 180.7 bpa.

Zuzolo also highlighted Illinois and the western Corn Belt as areas with poor crop conditions, particularly in terms of soil moisture, which he believes will limit corn yields. In contrast, soybean yields may have room to improve.