USDA Reports Bearish for Corn, Bullish for Soybeans, and Neutral for Wheat

Strategic Insights -

Government crop production and supply and demand reports, released on Wednesday, were bearish for Chicago Board of Trade corn, bullish for soybeans, and neutral for wheat, according to traders and analysts. The U.S. Department of Agriculture's (USDA) reports lowered projected soybean production and yield beyond trade expectations, while raising corn production and yield higher than most anticipated. The reports also increased wheat production and ending stocks, although not significantly departing from trader expectations. Traders are cautious in their early calls, with corn expected to open 3-5 cents lower, soybeans steady to 10 cents higher, and wheat steady to 2 cents lower.

Key Takeaways:

  • The USDA pegged corn production at 12.761 billion bushels, up from its July estimate of 12.290 billion and above the 2008 total output of 12.101 billion.
  • Analysts on average expected a production estimate of 12.472 billion bushels.
  • The USDA estimated the yield at 159.5 bushels per acre, up from the average analyst estimate of 157.1 bushels and up from the July estimate of 153.4 bushels per acre.
  • The yield in 2008 was 153.9 bushels per acre.
  • The USDA said farmers planted 87 million acres of corn, unchanged from the July estimate.
  • Most analysts were expecting a drop of 500,000 acres or more after the USDA announced last month it was resurveying acreage in seven states.
  • The government cut its ending stocks projection for 2009-10.
  • The USDA pegged new crop carryout at 1.621 billion bushels, lower than analyst expectations of 1.701 billion but up from a July estimate of 1.550 billion.
  • The new-crop carryout came in lower than trade expectations thanks to what a trader called a "rosy" demand outlook.
  • Old-crop ending stocks were pegged at 1.720 billion bushels, down from the July estimate of 1.770 billion.

Statistics:

  • Corn production: 12.761 billion bushels (up from 12.290 billion in July estimate and above 12.101 billion in 2008 total output)
  • Analyst expectations: 12.472 billion bushels (July estimate)
  • Yield: 159.5 bushels per acre (up from 157.1 bushels average analyst estimate and 153.4 bushels per acre in July estimate)
  • 2009-10 corn ending stocks: lower than analyst expectations (new-crop carryout: 1.621 billion bushels)
  • Old-crop ending stocks: 1.720 billion bushels (down from 1.770 billion in July estimate)
  • Soybean production: 3.199 billion bushels (down from 3.260 billion bushels in previous USDA estimate and below 3.213 billion bushels in average analyst estimate)
  • Yield: 41.7 bushels per acre (down from 42.1 bushels per acre in average analyst estimate and 42.6 bushels per acre in previous USDA estimate)
  • 2009-10 soybean ending stocks: 210 million bushels (down from 250 million in previous estimate and below 221 million in average trade guess)
  • Wheat production: 548 million bushels (higher than analyst expectations of 523 million bushels and up from 506 million in July estimate)
  • All wheat production: 2.184 billion bushels (up from 2.112 billion in July estimate and slightly above 2.15 billion in average trade estimate)
  • 2009-10 wheat ending stocks: 743 million bushels (higher than July estimate of 706 million and slightly above 737 million in average analyst estimate)

Sources:

  • Dow Jones Commodities News via Comtex
  • Dow Jones Newswires
  • Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com