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USDA Data Pushes Up Wheat Double-Digits

The corn numbers are neutral

DES MOINES, Iowa — The amount of U.S. soybeans left over at the end of this August is expected to be higher than the trade expected, corn slightly lower, according to the USDA Thursday.

As a result, the CME Group futures markets traded mostly lower.

The market is not reacting strongly, according to Scott Shellady, TJM Investments. “No real shockers. Market was leaning for a good number . . . looks like we will go back to trading the technicals.”

At the close, the March corn futures closed 1¼¢ lower at $3.69½, and new-crop December 2017 futures finished 1¾¢ lower at $3.95¾ per bushel.

March soybean futures closed 8¼¢ lower at $10.50½; November 2017 soybean futures ended 2¼¢ lower at $10.26.

March wheat futures ended 11¢ higher at $4.43½.

March soy meal futures finished $2.80 a short ton lower at $338.40. March soy oil futures closed $0.02 lower at 34.67¢ per pound. 

In the outside markets, the Brent crude oil market is $0.59 per barrel higher, the U.S. dollar is unchanged, and the Dow Jones Industrials are 135 points higher.

U.S. ENDING STOCKS

In its February USDA/WASDE Supply/Demand Reports, the government pegged the U.S. 2016-17 corn ending stocks at 2.32 billion bushels vs. the trade’s expectations of 2.335 billion bushels and the USDA’s January estimate of 2.355 billion.

For soybeans, the 2016-17 U.S. ending stocks are estimated at 420 million bushels, compared with the trade’s expectations of 410 million and the USDA’s January estimate of 420 million bushels.

The U.S. 2016-17 wheat ending stocks have been pegged at 1.139 billion bushels vs. the trade’s expectations of 1.18 billion bushels and the USDA’s January estimate of 1.186 billion.

For perspective, a year ago the USDA estimated the U.S. soybean carryout at 450 million bushels and the marketing year ended with only 197 million. “So, the USDA has a tendency to underestimate usage and overestimate ending stocks,” according to Al Kluis, Kluis Commodities.

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WORLD PRODUCTION

The USDA sees the 2016-17 Brazil corn production at 86.5 million metric tons, compared with the average trade estimate of 87.05 million metric tons and the USDA’s January estimate of 86.50 mmt.

Brazil’s soybean production is pegged at 104 million mt. vs. the trade’s expectations of 104.08 mmt and the USDA’s January estimate of 104.00 mmt.

For Argentina, the USDA sees its corn production totaling 36.5 million mt. vs. the average trade estimate of 35.78 mmt. and the USDA’s January estimate of 36.50 mmt.

Argentina’s 2016-17 soybean production is pegged at 55.5 million mt. vs. the trade’s expectations of 54.54 mmt and the USDA’s January estimate of 57.00 mmt.

TRADE RESPONSE

Jason Roose, U.S. Commodities grain analyst, says that Thursday’s USDA/WASDE report offered no real surprises.

“The soybeans are taking premium out of the market, postreport, due to the unchanged ending stocks from January; the USDA left South America bean production unchanged, which is negative. Endings stocks on corn were lowered slightly due to better feed and ethanol demand, perhaps giving corn support on breaks,” Roose says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that on the face of it, bearish beans as no big changes made for South America. 

“The drop in Argentina’s soybean production not enough for this crowd. No changes at all for the U.S. Corn U.S. and world headline numbers kind of bullish, but corn down with beans. Wheat looks bullish. Corn and wheat got the demand, beans will be losing demand,” Scovillle says.

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