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WASDE data seen as bearish

CHICAGO, Illinois ( USDA released bearish data Wednesday, by raising the U.S. old-crop corn and soybean endings stocks.

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CME Group floor traders are calling corn to open 20 cents lower, soybeans 20-30 cents lower, and wheat 10-20 cents lower Wednesday.

Jason Ward, Northstar Commodity Investment Inc. analyst, says the report is bearish across the board. "Not one friendly number, according to estimates. They slashed exports for next year to 1.8 billion bushels, assuming prices will stay high for this number to be attained." Ward adds, "Otherwise, that number is likely too low. Feed usage was also lowered by 50 million bushels, but that was offset by an increase in corn used for ethanol by the same amount."


In its May Production and Supply/Demand Reports, USDA estimated the 2010-11 U.S. corn carryout at 730 million bushels vs. the trade expectation of 665 million bushels and its April estimate of 675 million bushels.

Because this number is at a 15-year low, the market is monitoring the government's  estimate closely.

For 2011-12, the U.S. corn carryout is estimated at 900 million bushels vs. the average analyst estimate of 811 million. This is the first new crop carryout number of the year by the USDA, in this World Agricultural Supply and Demand Estimates (WASDE) report. 

"Both old crop carryovers of corn and soybeans swelled, which also cushions the negative blow a little. This report is fine, it gives us a little cushion for yield adversity and the likelihood is that corn acres come down in the June report. The odds of us planting 92.2 million corn acres is low. So that gives you some cushion to lower those acres," Ward says.

For soybeans, the U.S. 2010-11 carryout is estimated at 170 million bushels, compared to the average trade estimate of 153 million and the USDA's April estimate of 140 million bushels. For 2011-12, the USDA sees soybean carryout totals at 160 million bushels.

In its report, the USDA estimates the U.S. 2010-11 wheat carryout at 839 million bushels, vs. the average analyst estimate of 844 million and the government's April estimate of 839 million. For 2011-12, the U.S. wheat carryout is estimated at 702 million bushels.


The USDA pegged the U.S. 2011 corn yield at 158.7 bushels per acre, compared to its first estimate in February of 161.7 bushels per acre.

For soybeans, the USDA sees the U.S. yield at 43.4 bushels per acre vs. its February estimate of 43.4. For wheat, the USDA sees the U.S. 2011 winter wheat yield at 44.5., vs. 43.8 previous.

Wheat Production

The U.S. Hard Red Winter wheat production is estimated at 762 million bushels vs. the average trade estimate of 767 million bushels. In 2010, the U.S. HRW wheat crop was 1.018 billion bushels. This year's crop has been devastated by drought.

All Wheat production is estimated at 2.043 billion bushels, compared to a trade average guess of 2.042 billion bushels and a 2010 production total of 2.208 billion.

Report Reaction

Jack Scoville, PRICE Futures Group vice-president, agrees the report is bearish for many reasons. "Looks like a mostly negative report, and looks like a bear spread report. We should be lower across the board, with old crop leading the way."

Less demand showed up, which was against expectations, he says.  "New crop estimates are a little high but not drastically so. I think old crop will show the most weakness.  

Wheat production is higher than expectations, but only in Soft Red, he says. "With the rains and flooding, wheat production numbers need to be taken with a grain of salt," Scoville says. 

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