Content ID

197049

Soybeans Close 20¢ Lower on USDA Data

Corn and Soybean Yields Rise

DES MOINES, Iowa -- The U.S. soybean crop is getting bigger and the ending stocks rise, according to the USDA Wednesday.

As a result, the farm markets tumbled double-digits.

At the close, the December corn futures settled 13 1/2¢ lower at $3.40 3/4, while March futures finished 13¢ lower at $3.49 3/4 per bushel.

November soybean futures finished 19 3/4¢ lower at $9.82, while January soybean futures ended 20 1/4¢ lower at $9.91.

December wheat futures closed 8 1/2¢ lower at $4.06 3/4.

December soy meal futures settled $4.30 short ton lower at $311.40. December soy oil futures closed $1.00 lower at 34.31¢ per pound. 

In the outside markets, the Brent crude oil market is $0.30 per barrel higher, the U.S. dollar is higher, and the Dow Jones Industrials are 239 points higher.

In its November WASDE Report, the USDA pegged the U.S. corn average yield at 175.3 bushels per acre vs. the average estimate of 173 and USDA’s estimate last month of 173.4.

For soybeans, the USDA estimates the U.S. yield at 52.5 bushels per acre, which would be a record yield if realized. This is higher than the average analysts’ estimate of 52.0 bushels per acre and the USDA’s October estimate of 51.4.

The USDA pegged the U.S. 2016 corn crop size at 15.226 million bushels and soybeans at 4.361 million.

Scott Shellady, TJM Investment vice president and CME Group trader, says the USDA Report is bearish, but the markets are digesting them as well as possible.

“The USDA’s corn, wheat, and soybean ending stocks estimates are all bearish. Option volatility is getting hit. Pretty much everything across the board was mildly bearish but the market is taking it well,” Shellady says.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says that it’s clearly a bearish report on the production side, and especially in the corn.  

“Corn numbers were much higher than I was looking for and higher than anyone. Ending stocks also super high. Really nothing here for the bull today; even in bean demand as the crush got cut back while exports went up. Should be an ugly day. Big crops sure got bigger this month,” Scoville says.

2016/17 U.S. ENDING STOCKS

usda-wasde-november
The U.S. 2016/17 corn ending stocks are pegged at 2.403 million bushels, compared with the average analysts’ estimate of 2.3 million bushels and the USDA’s October estimate of 2.32 million.

For soybeans, the U.S. 2016/17 ending stocks are pegged at 480 million bushels, much higher than the average analysts’ estimate of 420 million and the USDA’s October estimate of 395 million bushels.

For wheat, the USDA pegged the U.S. ending stocks at 1.143 billion bushels vs. its October estimate of 1.138 billion bushels.

TRADE REACTION

Dustin Johnson, EHedger LLC grain analyst, says that obviously yields were higher than the market was anticipating, and that is the main story.

“The USDA raised demand estimates in kind but we are still worried about that early demand strength tapering after the first of the year. The market may be looking at the really strong dollar and feeling a sense of panic knowing how far off the low prices currently stand,” Johnson says.

Mike North, President Commodity Risk Management Group, says that the biggest surprise to many watching today's numbers was the rebound in corn yield.  “Anecdotally, many of the yields surfacing in recent weeks were much better than previously thought, so justification did exist.  However, many analysts viewed today's release with a thought of reduced yield to keep in harmony with last month's reduction,” North says.  

With numbers rising to 175.3 bpa, we not only establish a new record, but bring total supply (including stocks carried over from last year) to a level north of 17 billion bushels, North says.  

“Most interesting was the increase in Seed & Industrial usage, a category that gets little focus in the balance sheet.  The USDA is no doubt running out of places to park the added bushels.  Ending stocks have grown to 2.403 billion bushels, with stocks to use rising to 16.4%.  This is the largest in 11 years,” North says.

Soybean yields also rose in harmony with pre-report guesses by 1.1 bpa to a level of 52.5 bpa.  

“This worked its way straight to the bottom line of the balance sheet leaving ending stocks at 480 million bushels with a stocks to use ratio of 11.7%.  Together with an increase in Chinese beginning stocks, world totals rose by 4.17 MMT, allowing us to return to the levels north of the 2014/15 peak and again on a trend of increasing supplies,” North says.

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