Markets Digest WASDE's Aftermath
The futures markets have had time to digest the August crop reports and now face another month of trading before the next data point. There is still much interest in the weather forecast, and rain would be welcome in many parts of the Corn Belt, especially the northwest.
The USDA August corn and soybean crop sizes were almost a flip-flop of what was expected. The corn crop was a little smaller than the pre-report expectations, while the soybean crop was more on target. The reaction is reflected in the price changes for the week so far — up 10 cents on corn and down 30 cents on beans.
The smallish corn crop hasn’t changed the market’s opinion — many still believe the crop size will get larger, as ear weights could be heavier. The market still has the large crops of 2004 and 2009 in the back of its mind. There is also the feeling the soybean crop could be bigger, although that depends on rainfall in the next few weeks.
Plus, the soybean market still seems to be dealing with the unresolved issues around old-crop tightness. In the supply/demand tables, soybean exports were increased and soybean imports were decreased. But still the USDA left the carryout unchanged. The residual is now at an extreme -94 million bushels, continuing to suggest that the 2013 crop was massively underestimated. Although there are only three weeks left in the crop year, the market may not be quite ready to breathe a sigh of relief until a clear explanation of the situation is provided by the September 30 stocks report.
Note: The first set of FSA acreage data will be released tomorrow (Friday, August 15). This has a tendency to occupy the attention of market participants as it is a crude way to check the planted corn and bean acreage. They will also update this data in the middle of September. The USDA will not change planted acreage (if needed) until the October report.
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