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USDA releases bearish report

DES MOINES, Iowa ( USDA released bearish data Monday. In its September Supply/Demand and Crop Production Reports, the USDA indicates the U.S. 2011 corn crop is smaller, but equal to the trade's expectations.


For corn, the USDA estimates the 2011 corn yield at 148.1 bushels per acre vs. the trade's average analyst estimate of 148.8 bushels per acre. The corn production is pegged at 12.497 billion bushels vs. the average estimate of 12.505 billion bushels and the government's last estimate of 12.914 billion.


The USDA sees the U.S. 2011 soybean yield at 41.8 bushels per acre vs. the average trade estimate of 41.0 bushels per acre and the USDA's August estimate of 41.4. The U.S. soybean production is estimated at 3.085 billion bushels vs. the average trade estimate of 3.025 billion bushels and the USDA's previous estimate of 3.056 billion.


Scott Shellady, ICAP Energy grain analyst and CME Group floor trader says the report has very little bullishness.

"The corn yield came in as expected. Although the USDA lowered the yield by 5 bushels since August, it's not a shocker, traders say. The world markets are tanking and the dollar is stronger. The soybean yield number was bearish with a higher number than expected, carryout is higher, world carryover for corn is higher. It will be hard to rally, in the face of this morning's Report," Shellady says.

Jason Ward, Northstar Commodity market analyst says by early glance the corn yield is bullish, but the usage cut was dramatic, 400 million bushels lower vs. the August Report.  Today's corn usage number is set at 12.76 billion bushels. 

Corn production came down 5 bushels/acre, or 420 million bushels. Yet U.S. corn carryout only declined by 42 million bushels.

"The trade is going to have a hard time believing this large of a usage cut, following last month’s sharp cuts. This is basically USDA saying, carryout is not going below 700 million bushels by much as this is about pipeline. They are going to let the trade figure everything else out," Ward says.

Meanwhile, USDA dropped corn-used-for-ethanol down by 100 million bushels, exports were lowered by 100 million bushels.

"The soybean numbers, at first glance, look a little bearish. Yield increased to 41.8 up 0.4 bushels/acre and carryout was about steady at 165 million bushels

Overall, the report will be bearish to soy/wheat and a little positive to the corn, Ward says.

"In my view, the trade will be suspect of these aggressive usage cuts."


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