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USDA data seen unfriendly for grain prices

Agriculture.com Staff 02/06/2016 @ 9:55pm

CHICAGO, Illinois (Agriculture.com)--The USDA released bearish market data Wednesday in its March Supply/Demand report.

The Early Calls for the open are corn 3-5 cents lower, soybeans neutral to negative, and wheat 2-4 cents lower, according to the CBOT floor traders.

Matt Pierce, Futures International LLC, says the grains should follow the overnight trading. "People must have had the numbers last night. Domestically corn is very bearish with wheat bearish. Beans are slightly bullish due to increased exports and crushings. Internationally, the trade is feeling the Brazil and Argentina production numbers are getting a bit ahead of themselves with today's increases. Overall bearish but beans should hold ground making this a relationship report, not a flat price issue."

Jason Ward, Northstar Commodity Investment Services, agrees the the report is going to be viewed as bearish to corn and wheat and friendly to soybeans. The reduction in the corn crop was in line with the trade estimate, but no one was expecting such a sharp reduction in exports (100 million bushels). It was widely expected to be reduced by 50 million bushels, but not by 100 million.

The USDA estimated 2009-10 U.S. crop production at 13.131 million bushels vs. the average analysts estimate of 13.081 and its January estimate of 13.151 million. Also, the U.S. corn yield was pegged at 164.9 bushels per acre compared to the average analysts estimate of 164.5 and its previous estimate of 165.2 bushels per acre.

For soybeans, the USDA estimated U.S. 200-10 production at 3.359 billion bushels vs. the average analysts estimate of 3.35 billion and its January estimate of 3.361. Also, the USDA estimated U.S. soybean yield at 44 bushels per acre compared to the average analysts estimate of 43.8 and its January estimate of 44.0 bushels per acre.

U.S. Carryout

USDA estimated 2009-10 soybean carryout at 190 million bushels compared to the average analysts estimate of 195 million bushels and the January estimate of 210 million. The U.S. corn carryout is estimated at 1.799 billion bushels vs. the average trade estimate of 1.716 billion bushels and the USDA's previous estimate of 1.719. For wheat, the USDA estimated the U.S. carryout at 1.001 million bushels compared to the average trade estimate of 971 million bushels and the previous estimate of 981 million.

World Grain Production

USDA raised Brazil's 2009-10 soybean production from 66.0 million metric tons to 67.0. Argentina's soybean production was left unchanged at 53.0 million metric tons. USDA estimated China's soybean production at 14.5, unchanged from its February estimate.

USDA estimated the 2009-10 world wheat carryover at 196.8 million metric tons, higher than its February estimate of 195.9. For the world soybean carryover, the USDA raised that estimate from 59.73 million metric tons in February to 60.67 million metric tons today.

Report Impact On Corn Market

Globally, the corn stocks increased by 6 MMT, more than expected, Ward says. "This report gives the corn market some more supply "cushion" to withstand a weather issue in the coming months. The corn exports needed to average 28.5 mil/bushels/week before this report, but now that they slashed it by 100 million bushels we now need to sell 24.6 mil/bu/week," Ward says. "The fear that we all have in the export arena is the "quality" of this US corn crop and that is being reported to us by our export partners.

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