USDA confirms soybeans rising, corn not
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.
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