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USDA Data Proves Bearish for Corn, Soybean Markets

U.S. crop estimates fall, soybean ending stocks grow.

DES MOINES, Iowa — The U.S. 2018 corn crop is smaller than first thought while the size of the soybean crop dwindles too, according to the USDA.

As a result, the CME Group’s farm futures markets initially reacted positively for corn, negatively for soybeans.

A much larger U.S. soybean ending stocks number and world corn ending stocks number put pressure on today’s trade.

At the close, the December corn futures finished  1 1/4¢ higher at $3.73 1/2. March futures ended 1 1/2¢ higher at $3.85 1/2.
 
January soybean futures settled 1/2¢ lower at $8.79. March soybean futures closed 1/4¢ lower at $8.92.
 
December wheat futures finished 2 1/2¢ lower at $5.07. December soymeal futures settled 1.90¢ per short ton lower at $306.10. December soy oil futures closed 0.18 lower at 28.02¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.07 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 64 points lower.

U.S. Yields

In its November Supply/Demand Report, the USDA pegged the U.S. corn average yield at 178.9 bushels per acre vs. the trade’s expectation of 180.1 bushels per acre and its estimate of 180.7 in October. This equates to a production number of 14.626 billion bushels.

Corn USDA November USDA October
U.S. Avg. Yield 178.9 bu./acre 180.7
Production 14.626 billlion bushels 14.778 billion bushels

For soybeans, the USDA estimates the 2018 average yield at 52.1 bushels per acre vs. the trade’s expectations of 53.0 bushels per acre and the USDA’s October estimate of 53.1 bushels per acre. That equates to a crop production total of 4.60 billion bushels.

Soybeans USDA November USDA October
U.S. Avg. Yield 52.1 bu./acre 53.1 bu./acre
Production 4.600 billion bushels 4.690 billion bushels

U.S. Ending Stocks

The U.S. 2018/19 corn ending stocks are pegged at 1.736 billion bushels vs. the trade’s estimate of 1.775 billion bushels and the USDA’s estimate of 1.813 billion bushels.

For soybeans, the ending stocks are estimated at 955 million bushels vs. the trade’s estimate of 906 million bushels and the USDA’s October estimate of 885 million.

USDA pegged the U.S. 2018/19 wheat ending stocks at  949 million bushels vs. the trade’s expectations of 969 million and the USDA’s October estimate of 956 million.

World Ending Stocks 2018/19

The USDA sees the world corn ending stocks at 310 million metric tons vs. the trade’s estimate of 159.2 million mt., and USDA’s October estimate of 159.4 mmt.

For soybeans, the world ending stocks are pegged at 112.08 mmt., compared with the trade’s expectation of 111.0 mmt. and the USDA’s October estimate of 110.0 mmt.

The USDA sees the world’s wheat ending stocks at 266.71 mmt., compared with the trade’s expectation of 259.5 mmt. and the USDA’s October estimate of 260.2 mmt.

Trade Reaction

Jason Roose, U.S. Commodities grain analyst, says the USDA has surprised the corn market.

“Initial reaction was friendly in today’s all important November WASDE Crop Report, with all eyes focused on the lowered yield adjustments for corn and soybeans.”

Roose added, “Demand was reduced on soybeans, which was anticipated. The surprise on this report was the large increase in the world ending stocks for corn with an increase of 151 mmt. This was due to a revision of China’s corn crop production,” Roose says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that the USDA’s soybean and corn yields and production estimates were below average trade guesses, but production completely overshadowed by the WASDE numbers.  

“The changes in corn, wheat and soybeans due to the changes in China data for the latter two and finally the demand on the beans really hammered the market,” Scoville says.  

The corn and wheat numbers would be bullish, without the changes from China, Scoville says.

“World stocks levels, outside of china, actually go down,” Scoville says.  

The soybean market is recovering a bit, but the data is bearish due to the lost demand and sharp increase in ending stocks, Scoville says.  

“I’m leaving the beans alone, for now.  The analysts are not happy today, as USDA could have made the bean demand changes before today and not the same month as a key meeting between

President’s Trump and Xi. And, as many have been pushing on USDA to get China its own column in the WASDE data.  Wild stuff, but no reason to sell corn and wheat, China doesn’t buy neither in the world market that much anyway.”

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