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WASDE data to drop farm markets

The USDA released market bearish estimates Thursday. In its January Supply/Demand and Grain Stocks Reports, the government says the U.S. farmers harvested more corn than previous thought.

Early calls for the commodities are sharply lower Thursday. For corn, traders see a "limit" down start. Soybeans are seen opening 20-30 cents lower and wheat prices to follow.

U.S. Crop Production

For 2011, the USDA estimates U.S. corn production at (12.35 billion bushels vs. the USDA's December estimate of 12.310 billion bushels and the average trade analysts estimate of 12.280 billion. 

The USDA estimates the U.S. 2011 soybean production at 3.056 billion bushels, compared to the average trade estimate of 3.042 billion and the USDA's December estimate of 3.046 billion bushels.


For corn, the USDA raised its 2011 U.S. yield at 147.2 bushels per acre vs. the trade's average estimate of 146.4 bushels per acre and the USDA's December estimate of 146.7. The USDA pegged the U.S. soybean yield at 41.5 bushels per acre) vs. the average trade's estimate of 41.3 bushels per acre and the USDA's December estimate of 41.3.

U.S. Grain Stocks

The USDA estimates the U.S. corn stocks, as of December 1, at (9.642 billion bushels vs. the average analyst estimate of 9.401 billion bushels. For soybeans, the USDA estimates the U.S. stocks at (2.366 billion bushels vs. the average analysts estimate at 2.312 billion bushels. USDA estimates the U.S. wheat stocks at (1.656 billion bushels vs. the average trade estimate of 1.679 billion bushels.

Report Reaction

Jason Ward, Northstar Commodities grain analyst, says the market will be surprised at this report. "Wow! It's very bearish Grain Stocks for corn. Beans were also bearish, but not nearly as much as corn. Wheat was surprisingly friendly."

Matt Connelly, an independent CME Group floor trader agrees that the report is unfriendly. "The corn market was caught leaning the wrong way. The Report is bearish corn and beans. Wheat looked neutral but should follow lower," Connelly says.

Sal Gilbertie, Teucrium Trading commodities analyst, sees the Report data as neutral-to-bearish for corn. "Corn use for ethanol is projected to remain steady, even after the expiration of the ethanol related tax credits. Projected world use of corn is projected to rise to a record level once again. February’s report will give more visibility to the situation in South America, which could in turn cause an upward readjustment of projected export demand for U.S corn. Any price dip as a result of this report may be tempered by the uncertainty surrounding SAM weather and production," Gilbertie says.

Tim Hannagan, senior grain analyst, says the USDA data is a surprise.

"For soybeans, the data is surprisingly bearish on ending stocks but a lot was priced in yesterday. Corn ending stocks were lower, but well over expectations. So, a lower open is certain, but dry weather in South America looks to cut ending stocks next month.

Jack Scoville, PRICE Futures Group vice president, says the numbers definitely look bearish, with beans leading the way. "Should be sharply lower, mostly on the ending stocks estimates.  Production side is negative, but not hugely so. But, the cuts in domestic and export demand in beans for ending stocks increases will grab attention.  

Scoville adds, "I am sure that So America is not really in the report's data yet, but I am still looking.  But based on the headline numbers we can have a sharply lower day."

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