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No Major Shake-ups in USDA Corn, Soybean Stocks Data

Friday's USDA grain stocks and production data didn't hold many surprises for the trade, with carryout numbers falling fairly close to previous estimates, ones that the trade has largely digested.

Corn carryout for the U.S. is pegged at 1.246 billion bushels, slightly higher than the average trade estimate of 1.232 billion heading into Friday's USDA World Agricultural Supply and Demand Estimates (WASDE) report. That's up from June's estimate of 1.146 billion.

"Corn ending stocks are projected up 75 million bushels with a higher carry-in and lower feed and residual use more than offsetting the small acreage-driven decline in production," according to Friday's WASDE report. "The projected range for the season-average corn price is lowered 20 cents on each end to $3.65 to $4.35 per bushel."

U.S. soybean carryout was seen higher than previous estimates in Friday's report: USDA pegged 2013-14 carryout for beans at 140 million bushels vs. the trade's guess of 128 billion and June's USDA estimate of 125 million.

"Soybean supplies are 180 million bushels above last month’s forecast due to higher beginning stocks and production. Soybean crush is projected at 1,755 million bushels, up 40 million reflecting increased domestic soybean meal disappearance in line with adjustments for 2013-14 and higher U.S. soybean meal exports that offset lower projected exports for India. Soybean exports for 2014-15 are raised 50 million bushels to 1,675 million reflecting record U.S. supplies and lower prices. U.S. soybean ending stocks are projected at 415 million bushels, up 90 million. If realized, projected stocks would be the highest since 2006-07," according to Friday's WASDE report. "Prices for soybeans and products for 2014-15 are all reduced. The U.S. season-average soybean price is projected at $9.50 to $11.50 per bushel, down 25 cents on both ends of the range."

"Today’s WASDE report has confirmed the widely held belief that supplies of the major grains will be more than adequate in the coming year. Many in the trade believe yields may still have some room to be raised, especially for corn, although projected usage declines in corn seem a bit surprising and future upward usage revisions could potentially be offset by increased future yield projections. Overall, today’s report, coupled with current near-perfect growing conditions across the globe, is good news for consumers and end users of grains because prices are already being driven quickly toward the low end of the USDA’s projected on-farm price ranges," says Sal Gilbertie of Teucrium Trading.

"Soybeans may have a bit more room on the downside given the large increase in projected new-crop ending stocks. However, current low-end range pricing does not bode well for unhedged farmer producers or active speculators who have not yet established short positions. It seems likely some consumer buying and producer-hedger short covering could potentially begin to enter the markets at the current low-end price range, as might asset allocator buying for investors needing to reweight grains in their portfolios," he adds. "The markets seem poised for a tug-of-war at current levels; perfect weather conditions will need to remain to give the bears more strength, but any change in current ideal growing conditions could potentially give bulls some room to run."

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