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U.S. Corn Yield Is Getting Bigger, USDA Says

Soybean ending stocks are seen tightening.

DES MOINES, Iowa — On Thursday, the USDA dropped its U.S. soybean crop size estimate, while corn jumps up.

As a result, the CME Group’s farm markets diverged.

At the close, the Dec. corn futures finished 14¢ lower at $3.80 1/4. March corn futures finished 14¢ lower at $3.91 3/4.
 
Nov. soybean futures settled 1/4¢ lower at $9.23 1/2. Jan. soybean futures closed 1/2¢ lower at $9.37 1/2.

Dec. wheat futures closed 7 1/4¢ lower at $4.93 1/2.

December soymeal futures finished $1.90 per short ton lower at $307.80. December soy oil futures closed 0.07 cents higher at 29.78¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.78 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 150 points higher.

U.S. Production

In its October Crop Production and Supply/Demand Reports, the USDA pegged the U.S. corn yield at 168.4 bushels per acre vs. the average trade estimate of 167.5 bu./acre and its previous estimate of 168.2. The governmental agency estimated corn production at 13.77 billion bushels vs. the avg. trade estimate of 13.68 billion and its estimate last month of 13.7 billion.

For soybeans, USDA’s yield estimate came in at 46.9 bu./acre vs. the avg. trade estimate of 47.3 bu./acre and its previous estimate of 47.9.

Soybean output has been pegged at 3.55 billion bushels vs. the avg. trade estimate of 3.58 billion bushels and its previous estimate of 3.63 billion.

Harvested Acreage

In its report, the USDA pegged U.S. 2019 corn harvested acreage at 81.8 million vs. the avg. trade estimate of 81.6 million and its previous estimate of 82.01 million.

For soybeans, the harvested acreage is pegged at 75.6 million vs. the avg. trade estimate of 75.70 million and the USDA’s previous estimate of 75.8 million.

U.S. 2019/20 Ending Stocks

The USDA sees the U.S. 2019/2020 corn ending stocks at 1.929 billion bushels vs. its previous estimate of 2.19 billion and the avg. trade estimate of 1.784 billion.

For soybeans, the U.S. ending stocks were pegged at 460 million bushels vs. the avg. trade estimate of 521 million and the USDA’s previous estimate of 630 million bushels.

In its report, USDA pegged the U.S. 2019/2020 wheat ending stocks at 1.043 billion bushels vs. its previous estimate of 1.01 billion and the avg. trade estimate of 1.015 billion.

World 2019/2020 Ending Stocks

The USDA pegged the world corn ending stocks at 302 million metric tons vs. the avg. trade estimate of 298.3 mmt. and its previous estimate of 306.3 mmt.

For soybeans, the world’s ending stocks were left unchanged from the previous estimate of 99.2 mmt.

The USDA raised its world wheat ending stocks to 287 mmt. from 286.5 last month and the avg. trade estimate of 285.2 mmt.

Trade Reaction

Sal Gilbertie, Teucrium Trading founder, says that the soybean numbers and the corn yield are the two things that stick out in today’s report. “The soybean balance sheet is tightening pretty dramatically, and the harvest remains uncertain at best, which means bears may feel some pressure in the near term.

Gilbertie added, “Corn yields projected higher are viewed by many with skepticism. It seems like things will be very interesting between now and the November report when crop conditions and harvest results become more clear.”

Jason Roose, U.S. Commodities, says that weather will trump today’s USDA numbers.

“With all eyes on the weather, traders took a break to glance at today's October USDA Crop Report. It was bearish for corn, with a yield increase from September’s crop report. The corn yield was increased from 168.2 to 168.4, exports were reduced along with ethanol usage,” Roose says.

Roose added, “The soybean market reacted bullish, with ending stocks being lowered for the second month in a row. Soybean yields were reduced one bushel from September on beans from 47.9 down to 46.9. And, world ending stocks were lowered 4 mmt.  

Going forward, weather and demand will be the dominant items to watch during the next few weeks, Roose says.

Britt O’Connell, Commodity Risk Management Group, says that the biggest surprises in today's report were on yield for both corn and soybeans.  

“Yield was raised two-tenths on corn and lowered one full bushel on soybeans.  While harvested acres were reduced on corn, demand was lowered for ethanol and exports as well. Corn ending stocks came in at 1.9 bln vs 1.6 trade estimate,” O’Connell points out.  

She added, “From a technical perspective, a corn close above $3.80 per bushel is key. While there were few that published significantly lower yield estimates, it does feel like the market was expecting a greater reduction and certainly not an upward correction.  

O’Connell says that she is surprised that soybeans have mustered up more of a rally.

“Every 20 cents in the bean market is effectively resistance.  We did not breach $9.40 per bushel.  A move above $9.60 could point towards great price potential in that market,” O’Connell says.  

Soybean ending stocks were lowered nearly a one-third from their Sept numbers, down from 640 million bushels to 460 million.  

“Stocks-to-use are nearing 10% on beans. Generally, that is what pushes us towards $10 beans,” O’Connell says.

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