Soybeans Add 23¢, Reacting to Friendly USDA Data

The U.S. corn, soybean yields do not go up as the trade expected.

As a result, the CME Group's soybean market jumped 51¢ immediately after the release of the report then dropped to 35¢ higher. Corn jumped up a dime, while wheat reacted positively as well.

At the close, the Dec. corn futures finished 3 1/4¢ higher at $5.54. March futures finished 3 1/4¢ higher at $5.64. May corn futures settled 3 1/4¢ higher at $5.69.

January soybean futures ended 23 1/2¢ higher at $12.12.

March soybean futures closed 23¢ higher at $12.23. May soybean futures finished 22 1/2¢ higher at $12.34.

Dec. wheat futures closed 10¢ higher at $7.78.

Dec. soymeal futures closed 10.70 per short ton higher at $342.50.

Dec. soy oil futures ended 0.42 of a cent higher at 58.47 per pound.

In the outside markets, the crude oil market is $2.09 per barrel higher at $84.02 the U.S. Dollar is lower, and the Dow Jones Industrials are 224 points lower (-0.62%) at 36,207.

U.S. 2021/22 CROP PRODUCTION

In its report, the USDA pegged the U.S. corn production at 15.06 billion bushels vs. the trade's expectation of 15.05 billion and the previous estimate of 15.01 billion bushels.

The U.S. corn yield average was pegged at 177.0 bushels per acre vs. the trade's expectation of 176 bushels per acre and the USDA's previous estimate of 176.5.

For soybeans, the USDA pegged output at 4.42 billion bushels vs. the trade's expectation of 4.4 billion and the government's October estimate of 4.44.

For yield, the soybean average is pegged at 51.0 bu./acre vs. the trade's expectation of 51.9 bu./acre and the government's previous estimate of 51.5.

2021/2022 U.S. Ending Stocks

For corn, the USDA pegged the U.S. new-crop ending stocks at 1.49 billion bushels vs. the trade estimate of 1.48 billion bushels and the October estimate of 1.5 billion bushels.

For soybeans, the U.S. ending stocks were 340 million bushels vs. the trade that expected the USDA to print 362 million bushels today. In October, the USDA's estimate was 320 million.

In its report, the USDA pegged the U.S. wheat ending stocks at 583 million bushels vs. the trade's expectation of 581 million and compared with the October estimate of 580 million bushels.

2021/2022 World Ending Stocks

On Tuesday, the USDA pegged the world's corn ending stocks at 304.4 mmt. vs. the trade's expectation of 300 mmt. and the USDA's October estimate of 301.7 mmt.

For soybeans, the world ending stocks are estimated at 103.8 mmt. vs. the trade's expectation of 105.8 mmt. and the USDA's October estimate of 104.6 mmt.

For wheat, the USDA pegged world ending stocks at 275.8 mmt. vs. the trade's expectation of 276.5 mmt. and the USDA's previous estimate of 277.2 mmt.

Trade Response

Sal Gilbertie, Teucrium Trading, says that the USDA surprised the soybean market.

"Soybeans surprised with reduced yield and ending stocks lower than prevailing trade guesses. It seems like soybean markets were focused on nothing but bearish news for the past several weeks which is what surprised the markets when the USDA didn't confirm the bearish sentiment of traders. Harvest progress and Chinese imports will dictate prices for a while from here," Gilbertie says.

PJ Quaid, RJ O'Brien broker, says that today's USDA report was not bullish.

"The numbers today are not supportive, in my opinion. It feels like everyone was ready for a super bearish number. I think this is a case of 'sell the rumor, buy the fact'," Quaid says.

Jack Scoville, PRICE Futures Group, says that today's report has made for a very dramatic change in the market.

"I think the numbers are neutral-to-bullish, but beans made a 50¢ move in response to the numbers before coming back down a touch. The beans had been pretty beaten up in the last few weeks, because of all sorts of things like Brazil weather being good and crop going in fast and big, ideas of big U.S. crops, and the slower than hoped for export sales pace.

Scoville added, "So, we changed the narrative a bit and caught the market short. Corn a much less dramatic rally, but USDA did find more corn and somewhat higher ending stocks. But, the stronger-than-expected demand for exports and ethanol is helping the corn market," Scoville says.