MINNEAPOLIS — Soybeans continued to be the marketing bright spot in the U.S. Department of Agriculture crop production report amid the September surprises.

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 to 157.2.

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 Exchange.

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 what’s expected.

“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 now.”

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 said.

“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 with corn.”

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 big surprise.”

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 said.

“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.”