By Doug Tenney, Leist Mercantile
This morning, USDA released their latest estimate of U.S. corn and soybeans production for 2012. Corn production was estimated at 10.706 billion bushels with a yield of 122 bushels per acre. Soybean production was 2.86 billion bushels and a yield of 37.8 bushels per acre. Prior to the report release, traders were looking for corn production to decline while anticipating soybean production would increase.
Corn production was reduced but not nearly as much as traders had expected. Soybean product was increased, nearly 100 million more bushels than expected. Following the report, soybeans had a range of 30 cents in the first five minutes. Corn had a range of 18 cents in that same time frame.
Producers can expect both corn and soybeans to be very volatile in coming weeks as end users scramble to secure their cash needs for the next three to six months. Expect producers to be tight holders of grain as many will close the bin doors and not open them until 2013. Many will be looking to expect harvest lows could be in place for soybeans, especially when the market rallies in the face of higher than expected production. An excellent marker for soybeans is that even though ending stocks were higher, increased usage for both crush and exports is friendly in spite of higher yields. Corn is trading higher with ending stocks being lower than expected.
Prior to the report, many had looked at this report as an important benchmark and possible trendsetter for what the final production report for corn and soybeans will be when it is released in January 2013. In addition, the trade estimates prior to the report release were a record. The range of estimates ranged from 9.960 to 11.194 billion bushel, a whopping range of 1.23 billion bushels.
Last month USDA had estimated U.S. corn production at 10.727 billion bushels with a yield of 122.8 bushels per acre. Soybean production in September was estimated at 2.634 billion bushels and a yield of 35.3 bushels per acre.
Earlier this week, USDA had pegged corn harvest at 69% and the soybean harvest at 58%. Both are record harvest levels for the second week of October. Across Ohio harvest is rapidly progressing for both corn and soybeans. Earlier this week, the Ohio corn harvest was pegged at 22%, with the soybean harvest at 23%.