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USDA grain stocks report does little to effect markets

Traders had expected this report to be pretty boring with markets quickly returning to harvest yields and weather for dominating market features.

USDA put the September 1St corn stocks at 1.236 billion bushels, this was above trade estimates and slightly negative. Soybean stocks were 92 million bushels, below trade estimates. Wheat stocks were 1.914 billion bushels, above trade estimates. The corn number was negative, soybeans were neutral to friendly, and the wheat number was negative. Soybean production for 2013 was revised to 3.358 billion bushels, up 69 million bushels from the previous estimate of 3.289 billion bushels.

Prior to the report corn was down 2 cents, soybeans were down 9 cents, and wheat was down 8 cents. At 12:30 pm corn was down 3 cents, soybeans were up 2 cents, and wheat was down 2 cents.

Today was the quarterly USDA grain stocks report. With this report USDA is putting a mark on grain stocks as of September 1st. Many had expected USDA to revise the final 2013 production for soybeans. Soybean usage can be fairly well documented. Usage consists of exports which are reported weekly by USDA, crush which is reported monthly by a trade association of crushers. Those crushers account for over 90% of the soybeans crushed into soymeal and soyoil. For months USDA has been carrying a negative residual in the soybean supply and demand table implying production was larger than earlier reported.

Harvest has been underway for several weeks across the Midwest and South. Yield reports continue to be outstanding with many areas of the country on track to establish new record corn and soybean yields. Pressure looks to continue to the downside until harvest is at least 50-60% done. Last night the US corn harvest stood at 12% while the US soybean harvest was 10%. Both were behind the five-year average for harvest progress.

The market is already expecting in 2015 that US corn acres will be down, US soybean acres to increase and be a record. South America is already planting soybeans with early indications that acres will be up 3-5%.

US farmers have sold a very small amount of 2014 corn and soybeans compared to previous years. That trend is also manifested in Brazil as SAFRAS reports farmers have sold just 13% of the upcoming soybean crop compared to 28% at this time last year.

Grains have been in a downward spiral since April and May. With one day to go in September, soybeans were down $1.01 for the month, corn was down 40 cents in September, and wheat was down 82 cents.

Yield reports across the Midwest have been fantastic. If we see reductions in reports the next two weeks, that has the potential to be supportive. The next USDA production report along with supply and demand numbers will be on Friday, October 10.

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