November USDA report offers few surprises

By Doug Tenney, Leist Mercantile

USDA released their November production estimate for corn and soybeans on Nov. 9. They also published ending stocks as well as supply and demand tables.  USDA put the U.S. corn production at 12.31 billion bushels with a yield of 147.7 bushels per acre. Both numbers are down from October and slightly below trade expectations. Traders were looking for the corn yield to be 147.9 bushels per acre. USDA did also lower corn fed to livestock by 100 million bushels. Ending stocks were estimated to be 843 million bushels.  Corn used for ethanol was unchanged at five billion bushels.

Soybean production was pegged at 3.046 billion bushels with a yield of 41.3 bushels per acre, both are down slightly from the October report. Soybean demand the past several weeks has been extremely poor as South America has been capturing soybean sales normally coming out of the US during the harvest season. USDA lowered soybean exports another 50 million bushels with this report.  Soybean exports have been declining for several months due to poor demand.  Last year at this time the US was selling soybeans to China almost every week and at times, several times a week. That is not happening this year. Since the August USDA supply and demand report, US exports of soybeans have dropped from 1.4 billion bushels to 1.325 billion bushels.

Traders were not hugely surprised by the reports as the past week numerous news articles had been forecasting a friendly corn report but a negative soybean report. That is exactly what happened. Don’t be surprised if the U.S. corn yield declines a little more when USDA releases their final production for 2011 corn and soybeans in January 2012. There will not be a production estimate for corn and soybeans with the December 2011 reports.  However, supply and demand numbers will be out as normal with the December report.

The economic uncertainty from Greece continues to impact the markets. Now reports are circulating about debt issue problems from Italy. This is not fresh news but continues to again pop into headlines.  For months the market has been talking about debt problems with the PIGS countries of Portugal, Italy, Greece, and Spain. The continued existence of the European Union (EU) is being called questionable with the debt issues abounding in Europe.

Grain prices have been extremely stagnant in recent weeks.  The macro economic news with debt issues and countries around the world will be in the news for months to come. It will not go away.

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