MINNEAPOLIS — Soybeans continued to be the marketing bright
spot in the U.S. Department of Agriculture crop production report amid the
Market analysts anticipated the USDA’s crop production and
world agriculture supply and demand estimates reports to include declines in
corn and soybean harvested acres and a reduction in corn yield averages.
They didn’t happen.
The USDA projected average corn yields at 155.3 bushels per
acre, 0.09 bushels more than last month’s crop production report, while the
average trade estimate was 153.4 bushels per acre with lows ranging from 150.2
The trade also anticipated corn harvested acres to be
reduced by about 550,000 and expected soybean harvested acres down about
152,000, according to Louise Gartner, analyst with Spectrum Commodities.
“I think it’s just a matter of time before we get a better
look at the acres, but I do think there are big adjustments that are coming down
the road,” Gartner said in a teleconference hosted by the Minneapolis Grain
The USDA’s aggressive reduction in soybean production
estimates grabbed the trade’s attention. U.S. soybean production was reduced 120
million bushels from the August report, and yields were lowered by 41.2 bushels
per acre, down 1.4 bushels from last month.
“That gets it very close to that benchmark of 41 bushels per
acre,” Gartner said. “Our new crop carryout for soybeans is 150 million. They
shaved that off 70 million bushels, which is a pretty big chunk to take off in
one month, and that’s actually lower than what the trade was looking for. The
trade expected to see about 165-million-bushel number.
“So USDA getting pretty aggressive with soybeans, taking
yields down, taking ending stocks down fairly tight. We’re still above last year
by 25 million (ending stocks).
“But we haven’t even got into the heart of harvest yet for
soybeans, and what we are hearing is that yields are a little bit less than
“The soybean market has the most potential here as far as
the upside goes. With corn, they kind of quashed with this report, at least for
USDA also was aggressive with its state-by-state average
yield estimates in light of the dry and hot weather.
“They took the yields down in Iowa three bushels an acre to
43. They took Illinois down one at 46 and Minnesota down two with 39,” Gartner
“So those major producers which have kind of been right in
the bull’s eye of where the heat has been and the spreading drought, it looks
like they’re acknowledging some production issues with soybeans, but not so much
Due to the tighter stocks, USDA raised the estimated
farm-gate price by $1.15 on each end to a range of $11.50 to $13.50.
“I would say that soybeans are going to hold this level, and
from a chartist’s perspective, that would suggest you’re going to have a whole
other leg up, probably equal,” Gartner said. “This should become a measuring
gap, which takes you to right at about $15, so that would be my first target on
the upside for soybeans.”
On the bearish corn side, Gartner said the 0.09 increase in
average corn yields rather than a two-bushel decline the trade expected “was a
USDA increased total corn production to a record 13.84
billion bushels, 80 million more than last month’s estimate.
“Old crop carryout for corn was taken down 58 million on
increased feed usage and ethanol usage primarily and that, of course, carried
over,” Gartner said.
“So we do have lower carry-in for corn, but with production
up about 80 million bushels, that takes corn ending stocks up about 18 million
to 1.855 billion bushels. That’s a very big number and up 1.2 billion over where
we were a year ago.”
She addressed the long-range outlook for the corn market in
light of the differences between USDA estimates and trade projections.
“That’s really up for debate. When you look at the yields
that have been coming in from harvest so far, they’ve been monstrous and,
understandably, USDA has to account for that,” she said.
“They’re acknowledging you’ll probably see some production
issues once you get into Iowa, but are you really going to be able offset Iowa
and Illinois and Minnesota’s losses with the gains we’ve seen everywhere else?
The trade seems to think so.
“I guess from a corn perspective you’re going to have to see
the disaster actually get shown as it comes off the combines before that market
is really going to be able to get off the mat here.”
U.S. ending stocks for all wheat was increased by 10 million
bushels, and world wheat production was upped by another 3.3 million tons.
Global wheat production is estimated at a record 708.9 million tons.
“Although the wheat report was neutral to bearish, I think
wheat as been carving out a long-term bottom here the last couple of months at
these lows. A lot of that is because of the weakness in corn,” Gartner
“The spread had been so wide with wheat and corn, and it’s
tough to get wheat going. I tend to lean bullish toward wheat because of a
quality issue with spring wheat in particular, but also the demand base that
we’ve seen, as well.”