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USDA data seen as bearish

Agriculture.com Staff 10/10/2008 @ 6:40am

CHICAGO, Illinois (Agriculture Online)--U.S. farmers will raise 12.200 billion bushels of corn in 2008, USDA said on Friday. The report is seen as bearish for Friday's grain trade. The early price calls are seen as sharply lower to limit down.

USDA, in its October Crop Production and Supply/Demand report released bearish data for the grain markets.

For corn, the 12.200 billion bushel production estimate is above the USDA's September estimate of 12.072 billion bushels, and above the trade's average estimate of 12.076 billion bushels. Also, the USDA pegged the U.S. 2008/09 corn yield at 154 bushels per acre, above the previous estimate of 152.3.

The U.S. 2008/09 soybean production is pegged at 2.983 billion bushels, above the USDA's September estimate of 2.934 billion bushels, and above the trade's average estimate of 2.920 billion. Also, the USDA pegged the U.S. soybean yield at 39.5 bushels per acre, within the trade's average estimate of 39.3 bushels, and below the September estimate of 40.0.

CBOT floor traders say the government found more acres and more production. "They found more of everything since September," one floor trader says. "This whole report is bearish."

Matt Pierce, Futures International LLC, says the USDA report is negative along with Asian markets and an expected weak Dow factors today.

"Yield is bearish for corn to say the least, slightly supportive for beans but the increase in ending stocks is bearish. Where they keep finding old crop beans, I do not know. A small decrease in crush is offset by small gains in exports," Pierce says.

"Looking at corn, a 154 yield and higher old crop ending stocks will take the market limit lower if coupled with negative Asian and EU markets. Small shifts in feed and ethanol leave ending stocks right at last year's level," he says.

Jason Ward, Northstar Commodity Investment Co., says nothing is friendly in this report.

"Corn yield up to 154 bushels per acre, feed usage up 150 million, ethanol usage down 100 million. I agree with the report whole heartedly. In fact, in future reports ethanol usage will likely slip further and exports at 2 billion have to improve or else that number will be lowered also. Carryout on corn is 1.154 billion, 20 million over expectations," Ward says.

Ward adds, "All around bearish for corn. Without overnight markets it would be down 15, with overnight financial weakness don’t be surprised to see corn trade limit down."

USDA released the biggest shocking data with their soybean numbers, Ward says. "USDA found 2.2 million more acres of beans, nobody expected this. Carryout swells to 220 million bushels. They lowered crush by 15 million bushels, they raised exports by 50 million bushels (they needed to do this because we are on record pace). Yield fell to 39.5 bpa from 40.5 bpa. I think the bean yield will fall further, probably another bushel."

For wheat, USDA's new carryout estimate of 601 million bushels is up from 574 million last month. That figure is at the high end of expectations.

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