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Corn neutral, soybeans bearish in today’s USDA numbers

By Doug Tenney, Leist Mercantile

Today’s USDA report had corn production at 13.661 billion bushels, yield of 167.0, and ending stocks at 1.910 billion bushels. Soybean production was 3.550 billion bushels, yield was 46.9, and ending stocks of 475 million bushels.

The market has been anticipating this report for weeks. Anticipation can be highly overrated. Yet, it can also be disappointing as the amount of time and energy spent is quickly forgotten once the report is released. Don’t be surprised to just move on.

Will USDA finally get it right with corn acres and yield? However, with only 52% of the U.S. corn harvested shown on this week’s progress report, it means even less corn had been harvested when USDA compiled and field reports the beginning of November. Many anticipate the corn yield would decline in the last 20% to 40% of harvest. It could easily be the January 10, 2020 report to get a much better handle on corn yields when final 2019 production and yield are released.

Corn has been under pressure in recent weeks due to shrinking export demand. This week it has made several new 30-day lows on the December CBOT contract. Improving weather in South America along with increased acres have combined as negatives for corn. U.S. weekly export sales have been disappointing with actual shipments light as well. Exports could be cut again today. Last month, U.S. corn exports were reduced 150 million bushels to 1.9 billion bushels. It follows a trend which has reduced exports multiple times from the May report when they were projected to be 2.275 billion bushels.

Shortly after the report release, corn was 4 cents, soybeans were down 5 cents, and wheat was up 1 cent. Prior to the noon report, corn was down 2 cents, soybeans down 4 cents, and wheat down one cent.

The U.S. and China trade talks continue to dominate the news. No one is thrilled with this reality but it is where we are. With the mid-November Chile APEC meeting cancelled, it means a new location must be secured for a trade signing to take place But, first the trade deal needs to be accomplished. The last two days there have been numerous news stories of the tariffs being removed in stages. For word buffs, the word of the day this week has been, “tranche,” defined as slice or portion. It has appeared in multiple news reports. Yesterday, there was even a report in which China denied the idea of slices, instead stating the translation had not been done properly.

Trader estimates had the U.S. corn yield at 167.5, last month USDA had 168.4; corn production estimates were 13.643, USDA was 13.779 last month; and corn ending stocks estimates were 1.817 billion bushels, with USDA in October 1.929 billion bushels. Soybean trade estimates had the U.S. soybean yield at 46.6, last month USDA was 46.9; soybean production estimates from traders were 3.510 billion bushels, last month USDA was 3.550 billion bushels, and soybean ending stocks estimates were 428 million bushels, last month USDA was 460 million bushels.

The funds have been short corn and long soybeans for many weeks. Their positions have increased both for corn and soybeans this week. It will take a major surprise for them to suddenly change.

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