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USDA data seen bullish for corn, soy markets

Agriculture.com Staff 02/13/2016 @ 12:54am

USDA on Friday released a bullish monthly Supply/Demand report for the corn and soybean markets, according to market watchers.

Because it lowered the corn trendline yield from 152 bushels per acre to 150.3, the U.S. producers are expected to raise 12.46 billion bushels of corn in 2007-2008, the same usage amount for the U.S.

Don Roose, U.S. Commodities, said this puts supply in a tight situation. "The surprise is the government didn't use the trendline yield figure of 152. So, our margin of error is very tight. "

USDA lowered corn feed-usage for next year by 150.0 million bushels, and lowered exports by 225.0 million.

"I think this all means we are going to put risk premium back into the corn market," Roose said. "I see corn opening 5-7 cents higher today.

Roose is calling the CBOT soybean futures market 5-7 cents higher, and wheat 1-3 cents higher.

On the supply side for corn, the USDA estimated 2007-2008 carryout at 947.0 million bushels, and 937.0 million for 2006-2007.

"In order to achieve these numbers som rationing is going to have to take place, which means higher prices," Roose said.

For soybeans, the USDA estimated the 2007-2008 crop size at 2.745 billion bushels, using a 41.5 bushel yield average. The soybean ending stock estimate for 2007-2008 was 320 million bushels, nearly half of the 2006-2007 estimate of 610 million.

"That means the margin of error for this year's soybean yield is skinny," Roose said.

Noel Blue, a CBOT floor broker and analyst, agreed the USDA data should underpin the soybean market.

"Soy should rally on this imbalance," Blue wrote in her daily report. "In addition, the yield came in for 07-08 crop at 41.5 million (from 42.7 previous)...that does not paint a bearish picture in the slightest."

Meanwhile, USDA estimated U.S. 2007-2008 wheat production up 24 percent from 2006.

Winter wheat production is forecast at 1.62 billion bushels, up 24 percent from 2006. Area harvested for grain totals 37.2 million acres, up 19 percent from last year. Based on May 1 conditions, the U.S. yield is forecast at 43.5 bushels per acre, up 1.8 bushels from the previous year.

For wheat, the USDA estimated 2007-2008 ending stocks at 469 million bushels, and 2006-2007 at 412 million.

USDA on Friday released a bullish monthly Supply/Demand report for the corn and soybean markets, according to market watchers.

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