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USDA Data Drops U.S. Corn Market 25¢ Monday

Soybean market losses were less than corn and wheat damage.

DES MOINES, Iowa — The U.S. corn market dropped its daily limit low, 25¢, as USDA keeps corn production numbers high vs. previous estimates.

In its August Crop Production/WASDE Reports, the USDA raised the average corn yield and lowered production only slightly.

As a result, the CME Group corn market dropped its daily limit low of 25¢, while soybeans dropped only slightly.

At the close, the Sep. corn futures finished 25¢ lower (the daily limit low) at $3.85 1/4. Dec. corn futures ended 25¢ lower at $3.92 3/4. As a result, Tuesday's daily limit will move from 25¢ to 45¢.
 
Sep. soybean futures settled 12 1/4¢ lower at $8.66 3/4. November soybean futures finished 12 1/2¢ lower at $8.79 1/4.

Sep. wheat futures ended 27 3/4¢ lower at $4.71 3/4.

December soymeal futures settled $5.10 per short ton lower at $293.40. December soy oil futures closed $0.10 higher at 30.05¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.29 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 370 points lower.

U.S. 2019/20 Corn Production

On Monday, the USDA pegged U.S. corn acreage at 90.0 million vs. the average trade estimate of 87.7 million and the USDA’s previous estimate of 91.7 million.

On Monday, corn production totaled 13.9 billion bushels vs. the avg. trade estimate of 13.1 billion bushels and the July estimate of 13.8 billion.

On yield, the USDA pegged this year’s corn yield at 169.5 bushels per acre vs. the avg. trade estimate of 164.7 bushels per acre and the USDA’s July estimate of 166 bushels per acre.

U.S. 2019/20 Soybean Production

In its Monday report, the USDA pegged this year’s U.S. soybean acreage at 76.0     million. That compares to the avg. trade estimate of 80.8 million and the July estimate of 80.0 million.

Also, the USDA pegged soybean production at 3.68 billion bushels vs. the avg. trade estimate of 3.79 billion bushels and the July estimate of 3.84 billion.

Regarding yield, the USDA estimates the U.S. soybean crop averaging 48.5 bushels per acre vs. the avg. trade estimate of 47.5 bushels per acre and the USDA’s July estimate of 48.5.

U.S. 2018/19 Corn, Soybean Ending Stocks

For corn, the USDA pegged U.S. ending stocks at 2.36 billion bushels vs. the avg. trade estimate of 2.38 billion bushels and the July estimate of 2.34 billion.

For soybeans, the USDA sees the U.S. ending stocks at 1.07 billion bushels vs. the avg. trade estimate of 1.06 billion and the July estimate of 1.05 billion bushels.

U.S. 2019/20 Grain Ending Stocks

For corn, the USDA pegged U.S. ending stocks at 2.18 billion bushels vs. the avg. trade estimate of 1.61 billion bushels and the July estimate of 2.01 billion.

Farm Service Agency Acreage

In a separate report, the Farm Service Agency released acreage numbers that appear to be market-friendly for corn and soybeans.

For corn, U.S. farmers recorded planted acreage at 85.8 million and soybean acreage at 74.0 million.

Also Monday, the FSA released its prevent planted acreage, as of August 1, 2019.

  • Corn=11.2 million, as of August 1.
  • Soybeans= 4.35 million, as of Aug. 1
  • Wheat = 2.209 million, as of Aug. 1

Trade Response

Jack Scoville, PRICE Futures Group, says that the USDA report is negative for corn, for sure.

“USDA increased corn yields and threw the market limit down. USDA also cut corn demand for a significant increase in ending stocks.  That made for bearish world data as well.  The crop is so late that yields will be subject to much further revision and should be taken with a big grain of salt.  

Scoville added, “During a visit to Bloomington, IL, on Saturday, I witnessed a crop that had just silked and was in blister stage.  If it makes it home, there is a good crop there. But, a disaster is possible too and USDA and everyone else has no clue. Today, the USDA left the soybean yield alone, with a big crop in bean acreage area.  I think the bean area might be bigger, there were plenty of beans seen over the weekend but the area data should be good I think not the yield,” Scoville says.

Sal Gilbertie, Teucrium Trading, says that this was a surprisingly bearish report on the surface.

"But, the fact that the official numbers deviate so much from expectations, weekly crop progress reports, and the prevent plant acreage indications leaves traders confused and doubting the long-term validity of today’s numbers. Clearly prices will be volatile for the remainder of the harvest season as future WASDE reports begin to more accurately reflect the reality of the coming harvest," Gilbertie says.

Jason Roose, U.S. Commodities, says the USDA data has been received as disappointing.

“The much anticipated USDA August WASDE crop report turned into disappointment very quickly. All corn numbers were increased from the July report from yields to the world ending stocks. The 3.5 yield increase and sharp increase in 2019-2020 ending stocks sent corn sharply lower to daily trading limit levels lower,” Roose says.

Matt Tranel, Cash Advisor for Commodity Risk Management Group, says that the USDA numbers on corn, in particular, were the ones that have many scratching their heads.  

“The average trade estimate for harvested acres was 80.05 million with the bottom end estimate near 76 million and top end at 81.9 million.  The USDA had harvested acres printed at 82 million.  Quite bearish right there in it's own right.  The zinger on top of acres came in the form of the yield number released.  Many had thought yield may be close to unchanged today and revised later on in the year. But, yield ended up being released at 169.5, up 3.5 bushels/acre from the July report.  Coupled together and accounting for other supply and demand factors, ending stocks stand at 2.181 billion,” Tranel says.  

Tranel added, “This report likely places a wet blanket over the market for quite a while and limits top end opportunities.  We'll have to see how this crop finishes and the next couple months of reports but harvest just might be the next opportunity for a rally, that's if the acres and yield isn't as high as what the USDA is currently forecasting.”

***More to follow***

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