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USDA report seen as bearish for soybean market

Agriculture.com Staff 11/10/2009 @ 6:38am

CHICAGO, Illinois (Agriculture Online)--In 2009-10, the U.S. farmers will harvest 12.921 billion bushels of corn and 3.319 billion bushels of soybeans, the USDA estimated Tuesday.

CBOT floor traders call corn to open 2-4 cents higher, 10-15 cents lower on soybeans, and 2-4 cents lower for wheat.

In its November Crop Production and Supply/Demand report, the USDA's corn production estimate of 12.921 billion bushels is below the average analysts estimate of 12.995 billion bushels, and below the USDA's October estimate of 13.018.

The USDA estimated the U.S. 2009-10 corn yield at 162.9 bushels per acre, below the average analysts estimate of 163.7, and below the USDA's previous estimate of 164.2.

For soybeans, the USDA estimated the U.S. 2009-10 production at 3.319 billion bushels, compared to its October estimate of 3.250 billion bushels and the average analysts estimate of 3.269.

The USDA pegged the U.S. 2009-10 soybean yield at 43.3 bushels per acre compared to its previous estimate of 42.4 and the same figure for the average analysts estimate.

CARRYOUT

The USDA estimated the U.S. 2009-10 corn carryout at 1.625 billion bushels vs. its previous estimate of 1.672 billion and the average analysts estimate of 1.672.

For soybeans, the U.S. 2009-10 carryout is estimated at 270 million bushels compared to the USDA's previous estimate of 230 million bushels and the average analysts estimate of 235 million.

The U.S. 2009-10 wheat carryout is estimated at 885 million bushels vs. the USDA's previous estimate of 864 million and the average trade estimate of 869 million.

Jason Ward, Northstar Commodities Inc., says to get to the corn yield decline of 1.3 bpa, lower than the trade expected, the USDA had to offset that by lowering the export target by 50 million bushels.

"That export target was certainly a justifiable decline as we are running behind expectations each week in the export category. As far as the corn yield goes, this lowering of the corn yield flies in the face of history where "big crops get bigger". Now the question remains with just 37% of the corn crop harvested what does the yield do from here, and thinking about this USDA report data taken November 1st, we were less than 20% harvested at the time of this data being taken," Ward says.

Ward says the corn yield could continue to drop as lighter test weights are recorded.

"I think the exports could be lowered by another 50 million bushels in the next report as we continue to lag in that category. The other usage categories of corn should remain well supported with ethanol profitability continuing to gain and livestock profitability is inching more toward the profit side," Ward says.

For soybeans, Ward says he agrees with the USDA's larger yield and production estimate.

"I concur 100% with all the numbers from USDA in this report as we were hearing better than expected bean yields from our customers. The increases in usage are also warranted as we continue to see huge demand for soybeans, and if bean prices try to break lower on this report with the weaker US Dollar don't be surprised to see continued demand," Ward says.

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