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Bullish USDA data released Tuesday
The USDA released bullish data for Tuesday’s CME Group grain markets. The U.S. farmers will grow less corn than expected, the government agency says.
In its November Crop Production Report, the USDA pegged the U.S. 2010-11 corn production at 12.540 billion bushels compared to its October estimate of 12.664 billion and the average trade estimate of 12.545 billion bushels.
The government reached that total production figure by estimating the average corn yield at 154.3 bushels per acre, below its October estimate of 155.8. Tuesday’s yield estimate is below the average trade estimate of 154.4 bushels per acre.
For soybeans, the USDA estimates the 2010-11 production at 3.375 billion bushels, vs. an October estimate of 3.408 billion bushels and an average trade estimate 3.426 billion.
In its report, the USDA pegged the 2010-11 soybean yield at 43.9 bushels per acre vs. its October estimate of 44.4 and the average trade estimate of 44.6 bushels per acre.
The USDA estimates the 2010-11 U.S. corn carryout at 827 million bushels, below its October estimate of 902 million, and below the average analyst estimate 840 million bushels.
For soybeans, the government agency estimates the U.S. 2010-11 carryout at 185 million bushels, vs. its October estimate of 265 million and the average analyst estimate of 240 million.
Jason Ward, Northstar Commodities Investment analyst, says the report is bullish beans, bullish corn, neutral wheat (but will be pulled higher).
"Carryout on beans is 185, which is 60 million bushels under the trade estimate which is 25% less (A LOT). Any problems in S. America and we see $15 soybeans, maybe more," Ward says.
Ward adds, "I like all the corn numbers, we thought 154 bushels/acre. They raised corn used for ethanol by 100 million (based on Sept and Oct figures I agree 100%) and exports were reduced by 50 million bushels. Since the Oct report we haven't had any solid export sales so can't disagree there."
Hopefully the yield doesn't go down further in future reports, Ward says. "But honestly, odds are high that it does. End users (especially livestock) are in trouble financially."
Tim Hannagan, PFGBEst.com senior grain analyst, says beans are the winner of this report. "The surprise is the 2010-11 bean ending stocks at 185 m.b. versus 265 million from last month. This is a genuine threat to run out in 2011, if price doesn't go high enough to ration the crop."
Jack Scoville, PRICE Futures Group vice-president, says the report is certainly bullish for the grain markets.
"Well, the report for soybeans is bullish and it is the feature of the report. Less production than expected leading to much lower ending stocks than expected. We were higher overnight and I see no reason not to hold a 20 or 25 higher opening call and maybe more.
Scoville add, "Corn was dead on expectations, but not bearish at all and should hold its 10 higher overnight depending on the beans. Wheat is a disappointment, maybe, but can hold 10 higher as well. Rice looks a little disappointing too. We will see, beans should be the leader today."