USDA report not negative
Share Facebook Twitter Google + LinkedIn Pinterest Traders had expected the report to be negative for grain prices. That was not the case today. Ending stocks for old corn was estimated at 1.701 billion bushels, less than trade expectations. New corn ending stocks were 2.081 billion bushels, also less than trade expectations. Old crop soybean ending stocks were 350 million bushels, slightly below expectations. New crop soybean ending stocks were 290 million bushels, at touch above expectations. New crop wheat ending stocks were 1.105 billion bushels, just below expectations.Other changes within the report had old crop soybean exports up 35 million bushels, no surprise there. New crop soybeans had crush up 10 million bushels while exports were up 20 million bushels. Old corn saw exports up 75 million bushels and corn used for ethanol down 25 million bushels. No surprises there. New corn had exports up 100 million bushels and corn for ethanol down 25 million bushels. No surprises there. With corn ending stocks coming in below expectations of bigger increases, corn seems to be searching for a bottom. Weather will be the driving factor for corn prices.Just before the report corn was down 4 cents, soybeans up 14 cents, and wheat down 3 cents. Shortly after the report corn was up 3 cents, soybeans up 10-12 cents, and wheat up 4 cents.Brazil corn production was estimated at 80 million tons, down two million tons from last week.Anxiety. The market is seeing lots of uncertainty heading into this monthly USDA supply and demand report. The uncertainty is providing anxiety. Overall, traders were looking for a negative report day. Recent rains across much of the Midwest have corn and soybeans looking good in many areas. Granted there are areas that need some rain. That would include Ohio. Conflict exists for traders as they look at two things. Ending stocks are expected to increase for 2016-17 corn, soybeans, and wheat. That is a negative. Weather continues to see lots of uncertainty. The big weather concern is for heat. Will it really take place? Some areas are expecting temperatures near 100 degrees next week and into July 22. Several are expecting an actual dome to take place July 17 to 22. Without rain if those temperatures place one could expect higher prices are in the offering at some point.The weekly crop ratings actually improved last week for both corn and soybeans. Corn ratings were 76% good and excellent, up 1% from last week. Soybean ratings were 71% good and excellent, also up 1% from last week.Don’t expect USDA to change 2016 corn and soybean yields. August will be the first actual field surveys for corn and soybeans. Last month USDA had the U.S. corn yield at 168 bushels per acre while 2015 as 168.4 bushels per acre. The U.S. soybean yield last month was 46.7 bushels per acre with 2015 at 48 bushels per acre. Those surveys will give us a much better estimate for yields.Overnight the Midwest had rains in Iowa and Minnesota. Rains are expected today in the western Midwest. The six- to 10 and eight- to 14-day maps talk of normal to above temperatures with below normal rains.Corn prices are going to be solely dependent upon the weather. If rains continue timely, December CBOT corn could reach $3.20. Without rain they could climb back near the $3.90 mark. November CBOT soybeans could retest the $11.50 areaThe old crop soybean export basis is firming due to strong export demand. The export loadings report on Monday had corn and soybean exports last week above expectations. Earlier indications had August soybean exports nearly double those of normal.New crop ending stocks were expected to increase across the board. Trader estimates for 2016-17 corn ending stocks stood at 2.205 billion bushels. Last month it was 2.008 billion bushels. Trader estimates for 2016-17 soybean ending stocks are 287 million bushels. Last month it was 260 million bushels. Wheat ending stocks were thought to be near 1.107 billion bushels. Last month they were 1.050 billion bushels.Traders will be closely watching corn production in Brazil. It has already been lowered in recent months. Last month USDA estimated the Brazil corn production at 82 million tons. Some have already plugged an additional 200-250 million bushels of US corn exports coming from the U.S. due to the reduced corn production in Brazil.Overall the markets seem to be getting over the most surprising Brexit vote on June 23. It did throw the markets in turmoil for a few days. I think it demonstrates that the populace is not happy with the actions of governments. We could see additional exits from the EU for other countries in coming months.It looks like the market had put lots of time and energy looking ahead to this report, perhaps more than normal for this time of year. Now that the report is not negative, look for weather to be the big factor in coming weeks. While that is not rocket science news, expect lots of price volatility with huge price swings the next two weeks. The prospects of 100 degree temperatures in the next 10 days will keep the markets on edge.David Hightower of the Hightower report comments that OK weather could see December CBOT corn reach $3.31 and November CBOT soybeans reach $9.89. If the weather is dry corn could reach $3.97 and soybeans $11.23.