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USDA Lowers Soybean Ending Stocks, Sparks Rally

Thursday’s USDA crop production and supply and demand reports seemed to favor soybeans with a slight decrease in estimated U.S. yields and a lower ending stocks estimate.

Yields

In its October Supply/Demand and Crop Production Reports Thursday, the USDA pegged the U.S. corn average yield at 171.8 bushels per acre vs. the average trade estimate of 169.8 bushels per acre and last month’s estimate of 169.9 bushels per acre.

For soybeans, the average yield estimate is 49.5 bushels per acre vs. the average trade estimate of 49.9 bushels per acre and the USDA’s September estimate of 49.9.

U.S. Ending Stocks 2017-18

The USDA pegged U.S. 2017-18 corn stocks at 2.34 billion bushels compared with the average trade estimate of 2.25 billion bushels and the USDA’s previous estimate of 2.335 billion.

For soybeans, the U.S. ending stocks are pegged at 430 million bushels, compared with the average analysts’ estimate of 452 million bushels and the USDA’s September estimate of 475 million.

The U.S. wheat ending stocks were estimated at 960 million bushels vs. the average trade estimate of 944 million and the USDA’s previous estimate of 933 million.

ending-stocks-october

Trade Response

Al Kluis of Kluis Commodities says the report is “definitely positive for beans” with the lower-than-expected U.S. soybean ending stocks. The market reaction to a higher corn yield estimate was positive, taking out futures prices that had been trading below previous support levels just ahead of the report’s release.

Jason Roose of U.S. Commodities says, "Initial reaction for the October WASDE crop report was price positive for corn and soybeans with world ending stocks dropping on both corn and beans. Pre-report anticipation was for an increase in yield for corn and beans but beans yields were lowered from 49.9 to 49.5; harvested acres were increased for soybeans but lowered on corn and down 4 percent from last year. Yield reports and harvest progress will be closely watched when the skies clear."

Don Roose, president of U.S. Commodities, adds that the soybean carryout is still large, but the change may have caught buyers in China by surprise. Instead of making more purchases at the harvest low, they’re now catching up.

Several factors led to USDA’s smaller projected ending soybean stocks for 2017-18. “It was partly because last year’s crop was overstated by 11 million bushels,” Roose says. Stronger soybean exports and a stronger soybean crush added to reducing U.S. ending stocks to 430 million bushels.

“430 million bushels by itself is not a wildly bullish number,” he says.  But part of today’s bullish response by the market is also driven by a sense that USDA could lower the soybean yield again in its November report. “There’s some fear yields could shrink more.”  

At the close, the Dec. corn futures finished 3¢ higher at $3.49, while March futures finished 3 1/4¢ higher at $3.62 3/4.

Nov. soybean futures finished 26 3/4¢ higher at $9.92. Jan. soybean futures were 26 1/2¢ higher at $10.02 1/2.

December wheat futures closed 2 3/4¢ lower at $4.30 1/2.

Dec. soy meal futures finished $11.40 per short ton higher at $326.30. Dec. soy oil futures closed $0.13 higher at 33.28¢ per pound. 

In the outside markets, the Brent crude oil market is $0.71 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 21 points lower.

 

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