August 10th USDA supply and demand report

By Doug Tenney, Leist Mercantile

Below are comments from Doug Tenney on the August 10, 2012 USDA Supply and Demand Report

There were no major surprises with this report. However, producers need to be concerned where grains close at 3 pm today. The last thing you want to see would be lower prices following a neutral to slightly friendly report.

Today USDA released their monthly supply and demand report. They estimated the US corn crop at 10.779 billion bushels with a yield of 123.4 bushels per acre. Earlier in the week traders had estimated that the corn production would be 11.026 billion bushels with a yield of 127.3 bushels per acre. Last month they had pegged corn production at 12.97 billion bushels and a yield of 146 bushels per acre.

Soybean production was estimated at 2.692 billion bushels with a yield at 36.1 bushels per acre. Trader estimates prior to the report had estimated production of 2.817 billion bushels with a yield of 37.8 bushels per acre. Last month USDA had estimated soybean production at 3.05 billion bushels with a yield of 40.5 bushels per acre.

Just prior to the 8:30 report release, December corn was trading at $8.30 while November soybeans were at $16.31.

In the past two weeks the trade has been talking about the need for corn demand to be cut back or rationed by 1.3 billion bushels. The big question was, “How would USDA accomplish this?” Many had feared that the burden of rationing would fall upon the US livestock industry. That was indeed the case as corn fed to livestock was reduced 725 million bushels, corn for ethanol was cut 400 million bushels, while exports were cut 300 million bushels. The cuts totaled 1.425 billion bushels.

Grain calls were mixed following the report release. At 8:40 am, December corn was at $8.29, up 5 cents with November soybeans at $16.52, up 20 cents.

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