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USDA releases bearish report

DES MOINES, Iowa ( USDA released bearish data Friday.

Early Calls for the commodities are lower, traders say. For corn, it is seen opening 10-20 cents lower, soybeans 5-10 cents lower and wheat to follow.

In its September Stocks & All-Wheat Production Reports, the USDA says the U.S. corn stockpile is growing and the soybean stocks are tightening.

For corn, the USDA estimates the 2011 U.S. stocks at 1.128 billion bushels, compared to the average trade estimate of 962 million bushels.

The USDA estimates the U.S. 2011 soybean stocks, as of September 1, at 214.7 million bushels vs. the average trade estimate of 225 million bushels.

The U.S. 2011 wheat stocks are estimated at 2.180 billion bushels vs. the average trade estimate of 2.046 billion bushels.

Wheat Production

The USDA estimates 2011-12 All-Wheat U.S. production at 2.008 billion bushels, compared to the government's August estimate of 2.077 billion bushels.


Jack Scoville, PRICE Futures Group vice-president, says corn should be a negative number, beans friendly, and wheat mixed with stocks a little higher and production a little lower. "To me, the report, overall, is probably a little negative and especially for corn. "It should be a little lower across the board. I think beyond that we might put the final nail into the coffin for this part of the down move today or early next week.  Just cheap enough for the minute nothing more," Scoville says.

Jason Ward, Northstar Commodity Investment Co. analyst, says look for corn to lead the market lower. With the USDA estimating stocks 164 million bushels over the trade estimate, initial reactions are bearish for corn prices. 

"This gives us plenty of cushion in the October Report. So, ending stocks for corn are likely to increase from 670 million at least to 800 million bushels," Ward says.
"Our first initial glance at these numbers are they are so big we can hardly believe them, but that’s USDA for you," Ward says. This tells us if the numbers are right that there is plenty of corn in the country, enough to offset a lower harvest in the coming months."
Beans were within 10 million bushels of trade estimates but a little supportive. "But, in our view, the soybean data wasn't tightened enough to offset the corn weakness," Ward says.
Wheat was also 115 million bushels higher than the trade estimate. "So, not only more corn in the country, more wheat as well," Ward says.
Ward adds, This is just another example of USDA being outside the trade estimate on 2 of the 3 crops, leaving analysts like me scratching our heads on how an entire industry of trade estimates cannot even get close to what USDA has."

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