Report numbers mixed, corn bearish, soybeans bullish

The corn numbers are bearish as the production and yield was increased from last month. Soybeans are bullish due to a smaller than expected ending stocks at 150 million bushels. Traders were surprised with the higher, not lower corn yield. Today’s numbers could well point to a retest of December corn contract lows of $4.45 ¾.

Just before the report release, December corn was $4.67, down  5 ½ cents, while November soybeans were 13.49 ½, down 8 ¾ cents. Shortly after the report was released, December corn was $4.59, down 13 1.2 cents. November soybeans were $13.62, up 3 ¾ cents.

The ending stocks for soybeans looks to be the more watched number and not the actual soybean production number. Soybean ending stocks were estimated by USDA at 150 million bushels, down from last month’s 220. Just two months ago, the July report had ending stocks at 295 million bushels. At that time weather was not an issue with yield prospects increasing. Traders had also expected ending stocks to reach at least 300 million bushels and grow with time. Prior to this report, traders had expected an ending stocks number of 185-200 million bushels would be bearish. They had also expected if the ending stocks were 150-160 million bushels, the report would be bullish. Soybean production was estimated at 3.149 billion bushels, down from last month’s 3.255 billion bushels.

Corn production was estimated at 13.843 billion bushels, UP 80 million bushels from last month’s 13.763 billion bushels. The yield was estimated at 155.3      bushels per acre, last month was 154.4 bushels per acre. Traders were looking for both corn production and yields to decline.

Traders had expected this report to be pretty boring. They were looking for lower soybean production and yields due to the hot and dry weather in much of the Midwest the last half of August. Corn production and yields were also expected to be lower. However, the August dry weather was affecting soybeans much more than corn. Many are expecting the October 11 report to have a larger opportunity for price volatility. At that time we will be seeing significantly higher reports of actual harvest and resultant yields across the Midwest. Also, USDA should be factoring in the FSA acres totals as they account for corn and soybean acres. Earlier reports in August suggested corn planted acres could be down 2.5-3.0 million acres due to corn acres that did not get planted (prevented planted) this spring in the U.S.

The ethanol report out yesterday had 89 million bushels of corn used for ethanol, up 3.5% from the previous week. Ethanol margins are strong at 73 cents per bushel this past week compared to 50 cents the previous week. A year ago they were in the red 3 cents.

Corn harvest Is underway in Ohio. Early reports indicate excellent yields. We are hearing about yields above 200 bushels but no farm averages at that number yet. This week producers are scrambling to capture the huge basis premiums for quick delivery. As of Wednesday night, those premiums at central Ohio elevators were anywhere from 50-85 cents over the December. New crop basis is 20-40 under the December. Moisture is anywhere from 21% to over 30%.

Looking ahead to weather, World Weather had a report out today suggesting the fall harvest season could be wetter than normal, due in part to the record wet periods seen earlier in the year.

Traders will quickly return to actual harvest reports and those yields. They will expect soybean yields to decline further with the hot weather extremes the last several weeks.

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