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USDA sends corn lower

As of Sept. 1, the U.S. corn and soybean stocks are estimated to be higher than the trade expectations. As a result, the USDA's data this morning is bearish for most of the farm markets.

Discuss the USDA Report in Marketing Talk.

For corn, the USDA pegged the Sept. 1 corn stocks at 824 million bushels, compared to the average analysts' estimate of 688 million. 

For soybeans, the USDA sees the U.S. soybean stocks at 141 million bushels vs. the trade's expectation of 126 million bushels.

U.S. wheat stocks, as of Sept. 1, are estimated at 1.855 billion bushels compared with the trade's expectations of 1.938 billion bushels.


Mike North, senior risk adviser for First Capital Ag, says the reading of this report is as simple as more corn, more beans, and less wheat.  

"That’s the result of the Quarterly Stocks report. USDA issues a corn ending stocks number of 823 million bushels vs. the average guess of 681. Wheat ending stocks came in under the private guess by 58 million bushels. This will not have the wherewithal to stand up against the larger corn number," North says.  

Soybeans also experienced an uptick in ending stocks to 141 million bushels from an average guess of 124 million.  

"This comes on an increase in the 2012 soybean yield by .2 bpa. This was certainly unexpected. Markets are responding accordingly with soybeans down 30, corn down 6, and wheat unchanged. Harvest pressure will now take over as we close out the quarter and prepare for the coming Oct. 11 report," North says.

Don Roose, U.S. Commodities, says the report shows corn losing out to wheat. "Wheat feed usage replaced corn this past summer."

Jack Scoville, PRICE Futures Group vice president, says the few extra bushels of soybeans that the USDA found makes a big difference.  

"The numbers are reasonable. We know some farmers were holding back, etc.  So, that 141 million-bushel figure is believable and is being considered bearish. For the soybean supply/demand picture, it's still a tight situation, Scoville says. "But maybe this gives the soybean market a little more space to maneuver going into harvest."  

Corn seems to be holding better, as a result of the negative numbers.

"I guess the bigger supplies must have been more anticipated there. Plus, it is at recent lows already."

For soybeans, that market is taking the biggest hit, Scoville says. 

"I think the trade was much more worried about the potential for a tight supply there and are more willing to sell based off the numbers."  Scoville adds, "All in all, I think this report makes a corn rally during harvest that much harder to believe. After harvest, maybe, but not for a while, and it will help with the more variable yields we might hear as the harvest moves north and west."

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