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USDA Data Seen As Negative For Corn, Soybean Markets

Corn, soybean prices close lower.

DES MOINES, Iowa --The U.S. is sitting on a lot of corn and soybeans and even more than the trade expected, according to the USDA Friday.

As a result, the CME Group corn and soybean markets dropped 5¢, following the release of the numbers.

At the close, the December corn futures finished 8 1/2¢ lower at $3.56 1/4. March futures settled 8 1/2¢ lower at $3.68.

November soybean futures ended 9 1/2¢ lower at $8.45. January soybean futures settled 9 1/2¢ lower at $8.59 1/2.

December wheat futures ended 4¢ lower at $5.09.

December soymeal futures closed 2.80¢ per short ton lower at $309.00.

December soy oil futures finished $0.16 lower at 28.99¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.06 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 26 points higher.

Sept. 1 Grain Stocks

In its Quarterly Grain Stocks Report, released Friday, the USDA pegged the U.S. corn stocks, as of Sept. 1, at 2.14  billion bushels vs. the average trade estimate of 2.010 billion bushels and 2.293 billion bushels at this same time a year ago.

For soybeans, the USDA pegged the Sept. 1 U.S. stocks at 438 million bushels vs. the avg. trade estimate of 401 million bushels and 302 million at this time last year.

Also, the U.S. Sept. 1 wheat stocks were estimated at 2.379  billion bushels vs. the avg. trade estimate of 2.343 billion bushels and 2.266 billion a year ago.

2018 U.S. Wheat Production

On Friday, the USDA pegged the U.S. 2018 wheat output at  1.884 billion bushels vs. the avg. trade estimate of 1.872 billion bushels and the government’s August estimate of 1.877 billion bushels.

2017 U.S. Soybean Production

The USDA sees the U.S. 2017 soybean production totaling 4.481 billion bushels vs. the avg. trade estimate of 4.38 billion bushels and the USDA’s previous estimate of 4.39 billion bushels.

Trade Reaction

Cory Bratland, Chief Grain Strategist at Kluis Commodity Advisors says the report is certainly price-negative.

“The 2017-18 soybean crop was revised higher, thus resulting in higher carryout. Soybean carryout growing to over 438 million bushels. The trend has been that it keeps growing while we are in a trade dispute with China. Long term, though, I still see World demand for soybeans is very strong,” Bratland says.

Bratland added, “If/when the world demand slows down or goes backwards I get more nervous. We will more than likely not get a trade deal done with China until after the mid-term election. Focus now shifts to crop report and yield reports and so far bean yields are big.”

Could we see a national yield of 54 bushel per acre? It’s a possibility. That in turn will or could cause US carryout to surge to 1.0 billion bushels, Bratland says.
The corn market is more of a follower, today, Bratland says.

“Demand is very strong. The report’s slight increase in the stocks is coming from feed usage. Hard to figure that number. More animals are being fed but they are more efficient too. Corn yields in the U.S., so far this harvest, have been good but a little variable. Don’t expect a huge yield decrease but we could see maybe ½ bushel per acre.”
In the end, the producer needs to focus on total revenue per acres, Bratland says.

“With the combination of this year’s better yields, along with the Gov’t payment, the dollars can add up. So, even though we are staring at $7-$7.50 cash beans, the Gov’t payment and big yields are keeping guys in the in the game,” Bratland says.

Brian A. Rydlund, CHS Hedging Market Analyst, says the report shows a bigger soybean crop and bigger stocks.

“The trade thought that we had plenty and the report says, yes, we do.”           
Jack Scoville, The PRICE Futures Group’s Senior Market Analyst, says that it was a negative report across the board, but the reaction is not as bad as the news.  

“Beans corn and wheat quarterly stocks all above trade expectations and beans and corn above the highest trade guess, so it should be real negative.  But, the market is holding after its initial break.  Another sign that maybe we have bottomed out for now,” Scoville says.  

Scoville adds, “Wheat production showing a little more Spring Wheat than anticipated. Feed demand for corn is still bad, while soybean production might have been underestimated last year.  Should make the rest of the day very interesting.”

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