Home / Markets / Markets Analysis / Soybeans market / USDA confirms soybeans rising, corn not

USDA confirms soybeans rising, corn not

Ray Grabanski 10/11/2012 @ 9:53am President, Progressive Ag www.progressiveag.com

The October USDA report finally came out this morning as I write this column, and the results were well anticipated by the trade. USDA's report, surprisingly to Pro Ag, was about as traders expected with the corn yield actually dropped slightly to 122 bu/acre (down 0.8 bu/acre from last month!), and production down 21 mb from Sept. (but 108 mb larger than traders expected due to a hike in planted acres of 500,000 and harvested of 300,000 acres).  Soybean production was hiked more than traders expected by 90 mb to 2.86 billion on a 37.8 bu/acre yield (0.8 bu above trade expectations) as planted and harvested acres were also up 1.1 million acres. 

The soy production estimate was a large 226 mb hike from September, so it was quite a rise overall, with a 8% hike in production!!!  Grain sorghum production was up 9 mb (and above trade expectations 10 mb).  Ending stocks, though, were smaller than expected with corn 619 mb (down 26 mb from expectations) and soybeans at 130 mb (4 mb smaller than expected) as USDA hiked demand considerably in soybeans (exports up 210 mb or 20%, crush up 40 mb for a total 250 mb hike in demand on a 75c lower price).  Wheat stocks were 27 mb larger than expected at 654 mb, but down from last month's 698 mb.  

World Stocks were down 3.71 mmt wheat to 173 mmt, corn down 6.7 mmt to 117.27 mmt, but soybeans up 4.46 mmt to 57.56 mmt.  That could support wheat/corn throughout the day and week, but pressure soybeans.  The trade reacted strongly to the upside after 7:30, with corn currently trading 25c higher, soybeans 31c higher, and wheat 14c higher.  

Recall that USDA yields in September were dropped to 122.8 bu/acre corn and 35.3 bu/acre soybeans, but Pro Ag information indicated that once farmers hit the fields for harvest, they found much better than expected yields in most areas of good to top quality soils.  In ND and MN, farmers were reporting record large farm yields in both corn and soybeans in many areas, and obviously the estimates that included significant crop problems was very much exaggerated.  

Pro Ag was surprised to see that many traders still anticipated smaller corn yields in the October report, despite both Informa (127 bu/acre corn and 37.2 bu/acre soybeans) and FC Stone (123.9 bu/acre corn and 38.2 bu/acre soybean yields) who both forecast larger yields in the October report.  But USDA agreed with them, actually dropping corn yields a small 0.8 bu/acre Pro Ag yield estimates based on crop conditions finished the year at 129 bu/acre corn and 39 bu/acre soybeans - well above USDA's numbers and also above some of the private estimates (which will likely go up again in November for soybeans, maybe corn as well).  You would think that the October estimates would be very accurate, as corn is already over 2/3 harvested, and soybeans over 50% harvested - well above normal!  

Pro Ag is currently projecting harvest lows at well below current levels, expecting prices to continue lower into late harvest.  We currently project harvest lows expected at $6.735 Dec corn and $14 Nov. soybeans, but the lack of a hike in corn yield numbers in the October report could prevent prices from retreating anytime soon.  


This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

CancelPost Comment
MORE FROM RAY GRABANSKI more +

Late Spring, Declining Winter Wheat By: 04/15/2014 @ 7:50am Spring is upon us by the calendar, but winter won't let go of the current weather pattern! The…

Late Corn Planting? By: 04/08/2014 @ 7:47am The planting season is upon us as spring finally might be arriving, with the bitterly cold winter…

Technically, Corn Has Upside By: 03/31/2014 @ 3:17pm Corn prices rallied after a somewhat friendly report, reversing corn's price fortunes…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Farm markets Rally on Weather, Ukraine