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USDA Data Pushes Up Soybean Market 29¢ Thursday

Yields and output pushed slightly lower by USDA.

DES MOINES, Iowa — The U.S. farmers had a smaller haul in the fall of 2016 than first thought, according to the USDA Thursday.

“With a drop in the USDA’s ending stocks figures, what this report is telling us is that even though we are producing large crops, we are using a lot of it, too,” says Al Kluis, Kluis Commodities.

As a result, the CME Group’s farm futures jumped double-digits on soybeans, corn moved higher then dropped, and wheat traded slightly higher.

At the close, the March corn futures settled 1¢ higher at $3.57, and new-crop December 2017 futures finished ¼¢ higher at $3.86 per bushel.

March soybean futures closed 28¾¢ higher at $10.40¼, and November 2017 soybean futures closed 18½¢ higher at $10.16½.

March wheat futures finished 7½¢ higher at $4.26¼.

March soy meal futures closed $13.00 per short ton higher at $327.90. March soy oil futures finished 0.07¢ higher at 36.07¢ per pound.

In the outside markets, the Brent crude oil market is $0.87 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 60 points lower at 19,893 points.

Report Results

In its January Crop Production and Supply/Demand Reports, the USDA/WASDE data shows the U.S. 2016/17 corn production at 15.148 billion bushels vs. the USDA’s November estimate of 15.226 billion bushels and the average analysts’ estimate of 15.19 billion.

The U.S. corn yield is pegged at 174.6 bushels per acre compared with the USDA’s November estimate of 175.3 bushels per acre.

For soybeans, the U.S. 2016/17 production is pegged at 4.307 billion bushels vs. the USDA’s November estimate of 4.361 billion and the average analysts’ estimate of 4.374 billion.

USDA’s soybean yield estimate of 52.3 bushels per acre is below its November estimate of 52.5 bushels per acre and the average analysts’ estimate of 52.7 bushels per acre.

usda-ending-stocks-january-2017
Wheat

On Thursday, the USDA pegged the U.S. All Winter wheat seedings for 2017 harvest at 32.40 million vs. the average analysts’ estimates of 34.13 million. This is the lowest in 108 years.

Quarterly Grain Stocks

As of December 1, the amount of U.S. corn on hand totaled 2.35 billion bushels vs. the average trade analysts’ estimate of 12.30 billion bushels. For soybeans, the December 1 stocks were pegged at 2.89 billion bushels vs. the average trade estimate of 2.935 billion bushels. For wheat, the USDA pegged December 1 stocks on-hand at 1.18 billion bushels vs. the average trade estimate of 1.148 billion.

Trade Reaction

Sal Gilbertie, Teucrium Trading founder, says that the report shows adequate supplies of all grains are confirmed in this report.

“But, the corn and soybean markets do not seem entirely comfortable with reduced supply estimates, and wheat prices are holding even with record large current inventories, undoubtedly due to U.S. Winter Wheat plantings ten percent lower than last year.”

Gilbert adds, “The grain markets seem to be signaling that with demand for all grains still at record annual levels, now is not the time of year for complacency with regard to the ability of farmers to meet future demand growth with another year of record production. Now that the numbers are in, the question on everyone’s mind is “What might happen if the weather isn’t perfect again next year?”

Jack Scoville, The PRICE Futures Group’s Senior Market Analyst, says the reports are bullish.

“All numbers came in below expectations for corn and soybeans.  Even rice much less yield and much closer to the truth there.  The ending stocks estimates also well below expectations,” Scoville says.

“So far, I have not seen much for the bear on this report except for the end of the day there is still a lot out there.  The wheat acreage loss is very significant, but could have been bigger,” Scoville says.

Scoville adds, “We are having a big push higher early, we see how well it holds, but the market is not negative at all as beans starting to break out higher on the daily charts, wheat already trending up a bit on weekly charts and hoping to close here. Plus, the daily charts flip back long and corn still in range.”

Jason Roose, U.S. Commodities, says that the initial reaction for today's multi-faceted crop production report was mixed in the grains. “Production was lowered in both corn and soybeans which was a mild surprise, world cornstocks were lowered slightly from last month but the South America bean production was increased slightly from last month which was mildly disappointing.”

Jason Ward, Northstar Commodity Investment Co., says this report will be viewed as supportive, especially to soybeans. “Yields went down, not UP. We digested a BIG increase in Brazil production and still World soy stocks declined. Argentina likely has some room to move down on production, especially if wet weather continues."

This report will keep the spreads favoring soybeans over corn for 2017 planting season,” Ward says.

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