Market Report: Sell the Rumor Buy the Fact Friday!

In the USDA August Supply Demand report Friday, the USDA shocked the market with a yield projection of 175 bushels an acre and total production just over 15 billion bushels. The average trade guess was a 171 bushels an acre yield. It seemed like the market was trading a yield much higher than 171 bushels an acre, and that might explain why corn closed firmer Friday. One of the old sayings in the grain markets is sell the rumor, buy the fact. Maybe the 175 bushels an acre estimate was already "in the market." Another indication the bearish numbers were already in the market is that corn was 3-4 cents higher in the overnight session!

The bean market shrugged of the USDA production estimates Friday too. The USDA raised the national yield estimate 2.2 bushels an acre to 48.9 bushels an acre and increased total production to just over 4 billion bushels. Another reason that both corn and beans held Friday was because the USDA sharply increased demand. There also is a tendency to put in an early harvest low in big crop years. The other unknown that was not talked about Friday is maybe the crop is not as big as the USDA projected! There has been a lot of extreme weather in the entire country this growing season.