USDA data soybean friendly

03/09/2012 @ 8:00am

DES MOINES, Iowa ( USDA's WASDE Report released market-friendly data for soybean prices Friday. 

CME Group floor traders see the Early Call for commodities higher. For corn, the market is seen opening 3-5 cents higher, soybeans 5-7 cents higher, and wheat 7-9 cents higher.

In its March world crop production and U.S. and world supply and demand reports, the USDA lowered South America soybean estimates.

World Grain Production

For Brazil, USDA dropped that country's 2011-12 soybean production from 72.0 million metric tons to 68.5 mmt, compared to the average analyst estimate of 69.5 mmt.

Argentina's 2011-12 soybean production is estimated at 46.5 mmt, vs. the USDA's February estimate of 48.0 mmt and the average analysts estimate of 47.0 mmt.

Meanwhile, USDA left unchanged the 2011-12 Argentine corn production estimate from 22.0 mmt in February to 22.0 mmt. today, all compared to the average analysts estimate of 21.3 mmt.

U.S. Carryout 

In its supply and demand report, the USDA estimates the U.S. 2011-12 corn carryout at 801 million bushels, vs. its February estimate of 801 million bushels and the average analysts estimate of 784 million.

For soybeans, the USDA pegs the U.S. 2011-12 carryout at 275 million bushels, compared to 257 million bushels and its February estimate of 275 million bushels.

The USDA dropped/raised its U.S. 2011-12 wheat carryout estimate to 825 million bushels vs. its February estimate of 845 million bushels and the average analysts estimate of 838 million bushels. 

Trade Reaction

Jason Ward, Northstar Commodity Investment Co. analyst says the report is friendly for all commodities.

"The only change in US stocks was a 20 million bushel reduction in the wheat stocks, surprised they left beans unchanged, corn not so much as they lowered corn 50 million in each of the last two reports

Finally, we are chewing through some of this record world wheat supply, he says.

"Regarding Brazil soybeans down 3.5 MMT (friendly) and Argentina soy down 1.5 MMT, this is also constructive," Ward says.

Jack Scoville, PRICE Futures Group vice president, says the reports contain nothing that has not been talked about. "The South America soybean estimates are right in-line with trade ideas.  Corn is too.  Maybe the biggest surprise is the increase in wheat demand and the cut in ending stocks," Scoville says.  

Prices are higher in beans and wheat overnight, maybe the markets open about there, Scoville says.  

Scoville adds, "Interested to see if we can hold this, the reports are price positive but no shocks and so maybe we see some buy the rumor and sell the fact. Plus, some weekend liquidation into the close. I am not sure."

Sal Gilbertie, Teucrium Trading analyst, says the report is quite neutral across the board, with the exception of a slight downward revision in global inventories for wheat and coarse grains. 

"Soybean production in South America is reduced, but the markets were expecting lower ending stock levels here in the US, which did not occur," Gilberties says. 

While the balance sheet for old-crop corn remains especially tight, attention will now turn to weather and spring planting issues in the Northern Hemisphere, where early planting could alleviate concerns about end of season old crop tightness, Gilbertie says. 

The WASDE Report indicated that feed grain use is up across the board, which indicates increased protein consumption patterns remain intact in the emerging market countries, Gilbertie says. 

"Markets will continue guessing future levels of Chinese imports of soybeans and corn. Weather and imports are the focus going forward," Gilbertie says.