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Higher use, lower prices: WASDE falls in expected range

Jeff Caldwell Updated: 12/10/2013 @ 5:34pm Agricultural content creator and marketer.

The grains are trading lower after USDA released what iniitally looked like bullish figures for corn and soybeans. But the monthly World Agricultural Supply and Demand Estimates (WASDE) report contained no real surprises, and the trade saw it coming, so now attention will likely turn back to a couple of factors that were already in play on the bears' side.

Tuesday's WASDE report showed soybean exports and overall corn use have both increased over last month's estimates, but the latest data all fell within previous trade range estimates. Soybean exports are seen higher than a month ago, with a total of 1.475 billion bushels leaving U.S. fields for destinations abroad. Though that has officials expecting higher prices for the next month, the trade didn't agree.

"The U.S. season-average soybean price range for 2013/14 is projected at $11.50 to $13.50 per bushel, up 35 cents on both ends of the range," according to Tuesday's report. But, in trading shortly after the report was released, January soybean futures were 2 1/2 lower at $13.41 1/4 per bushel. At the same time, March corn was 5 1/2 lower at $4.32 1/2 per bushel while March wheat -- the leader on the downside Tuesday -- was 12 cents lower at $6.38 1/2.

"The USDA statistics fell in line with expectations for lower ending stocks in corn and soybeans due to increased domestic demand and exports. Despite a 95 million-bushel reduction in corn ending stocks, the U.S. remains well supplied," says Steve Kahler, chief operating officer for Teucrium Trading LLC. "Soybean inventories remain tight at 150 million bushels meaning the world will rely on South America to maintain steady soybean supply and pricing as we move into 2014. Wheat supply and demand remain well balanced. The market will continue to focus on the developing South American crop and the economics of planting corn vs. soybeans for the upcoming crop year."

Tuesday's report also showed a critical figure to the corn marketplace; the data show U.S. corn use for ethanol is higher than expected, and that contributes to an overall higher use picture in general, on top of an already strong export picture.

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