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USDA data sinks soybeans 39¢

DES MOINES, Iowa ( USDA/WASDE Report Monday lowered the U.S. soybean ending stocks to its second tightest since 1976. Yet, the trade is reacting negatively to the numbers.

At the close, the May corn futures contract settled 10 3/4 cents lower at $4.78. The May soybean futures contract ended 39 cents lower at $14.18. May wheat futures finished 13 cents lower at $6.40 per bushel. The May soymeal futures contract closed $13.10 per short ton lower at $447.70. The May soyoil futures finished $0.46 lower at $43.86.

In the outside markets, the NYMEX crude oil is $1.49 per barrel lower, the dollar is higher, and the Dow Jones Industrials are 60 points lower. 

In its report, the USDA estimates the U.S. soybean ending stocks, as of August 31, at 145 million bushels. The average analysts' estimate was at 141 million bushels, and the USDA's previous estimate was 150 million bushels.

For U.S. corn ending stocks, the USDA estimates 2013-14 pipeline at 1.456 billion bushels, compared to the average analysts' estimates at 1.487 billion bushels, and USDA's previous estimate at 1.481 billion.

U.S. wheat 2013-14 ending stocks have been pegged at 558 million bushels, compared to the average analysts' estimate of 568 million and the USDA's previous estimate of 558 million bushels.

Rich Nelson, Allendale Inc. grain analyst, says the market is disappointed over the lack of any serious decline in U.S. bean stocks and Brazil bean production. "We are concerned that USDA may attempt to manage soybean stocks similar to last year. Last year stocks were left unchanged at 125 million bushels from February through the September reports."

Peter Meyer, PIRA Energy Group analyst, says the report has two items of interest. "Market reaction. Even though both corn and soybean ending stocks were lowered, the knee-jerk reaction of the market was to hit the sell button. This speaks volumes about the Fund positioning in these markets, both of which are long," Meyer says.

The second item of interest was unchanged feed and residual demand in corn, Meyer says. "The PEDv, the U.S. swine virus, situation is on everyone’s mind as it pertains to feed demand. I find the lack of movement almost comical. Soymeal production was lowered by 250,000 short tons, which may have something to do with corn feed demand staying unchanged, but it seems far-fetched."

Jack Scoville, PRICE Futures Group vice president, says the USDA did not cut the ending stocks as much as expected, and the reaction has been strong since specs are very long. "USDA kept the change down in part by increasing imports, and that might be the thing sticking out to people. It also cut the crush, not a good thing for a demand rally."

So, the reaction is big and might get bigger as USDA implies we are getting high enough priced to change the overall supply to the market, Scoville says.  

"The corn data showed a smaller-than-expected change, too, with exports going up but nothing else. The trade had looked for more," Scoville says.  

Wheat data is a non-event.

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