Soybeans bullish to neutral, corn neutral

Prior to the report corn was at $3.47 up 1.5 cents. Soybeans were $9.53 down one cent. At 12:20 pm corn was down 3 cents, soybeans up 6 cents, and wheat was up 2 cents. 

The corn yield was estimated at 173.4 bushels per acre, right in line with trade expectations.  Corn production was 15.057 billion bushels. Corn harvested acres increased by 200,000 acres. Ending stocks for corn declined to 2.320 billion bushels, down from last month at 2.384 billion bushels.

The soybean yield was estimated at 51.4 bushels per acres and again right at the trader estimate. Soybean production was 4.269 billion bushel, up from last month at 4.201 billion bushels.  Soybean harvested acres were unchanged. Ending stocks were higher by 30 million bushels at 395 million bushels. Some could call the report bullish for soybeans as ending stocks did increase but came in below the trade estimate of 413 million bushels. It could be bullish since the number was something less than 400 million bushels.

The Brazil soybean production was estimated at 102 million tons. Last month it was 101 million tons. Soybean production in Argentina was pegged at 57 million tons, unchanged from last month. The Brazil corn production estimate of 83.5 million tons is up one million tons from last month. The Argentina corn production at 36.5 million tons is unchanged from last month.

Traders will focus heavily on two numbers today, the US corn yield and the U.S. soybean yield. The market looks for the corn yield to move lower while the soybean yield increases. That thought has permeated the market since the Sept. 12 report. The corn yield is expected to decline compared to the September yield of 174.4. Trader estimates put the US corn yield at 173.5. While corn yield estimates are coming down the reduction has been tempered in recent weeks due to yield reports of better than expected in Illinois and westward. Trader estimates put the US soybean yield at 51.5, the September yield was 50.6.

Today is a day of reckoning for soybeans on two fronts. Huge yields head butts massive demand. The increased soybean yield seems to be a forgone conclusion. It is just a matter of how much it increases.  A point to bring out is that the farmer participation in USDA surveys for this report is record low with a response rate at 66.5% compared to the normal rate of 79%. Not sure what that means other than to just point it out. Long forgotten is that the September yield at 51.5 bushels was above the high end of expectations with November CBOT soybeans closing 16 cents lower on Sept. 12. 

Bottom line, there are lots of moving parts for today’s USDA report, especially for soybeans. Higher yields, increased harvested acres, and the low farmer participation in the surveys all add to the uncertainty. It would seem a surprise is certainly possible in today’s reports.

Moving on to corn, in the last 20 years the October corn yield compared to September has decreased in just five of those years. Prior to the report December CBOT corn was $3.47 up 1.5 cents for the day. The contract low of $3.14.75 was made on Aug. 31. 

A forgotten aspect ahead of this report will be corn and soybean harvested acres. While it is not getting much traction many are expecting both corn and soybean harvested acres to increase 50,000-100,000 acres. Ideas of higher acres come from FSA enrollment acres being higher than expected from earlier reports this summer.

China has been very active the last few days buying eight cargoes of US soybeans. They were on a week long holiday earlier this month. It appears they are making up for lost time.  Current USDA estimates have China importing 82.5 million tons of soybeans. Five years ago they imported just 52 million tons of soybeans, an increase of 58%.

This week’s weekly crop progress report put the U.S. corn harvest at 35%, below trade estimates of 40% to 45%. The five year average is 38%. The U.S. soybean harvest was pegged at 44% completed with trade estimates of 50% to 55%. The five year average is 47%. Corn yield reports continue to be widely varied with very few producers seeing record yields in Ohio. While many corn yields will be above average, they rate as “disappointing” by many producers. Ohio is experiencing some outstanding soybean yields with many reports of 55 to 80 bushels per acre. Corn harvest in Ohio is 23% done while the soybean harvest is 31% completed. 

The farmer sell rate, harvest progress, and elevator lines will be important factors the next two weeks. Weather looks great for harvest the next four days. Don’t forget to pay attention to the close for grain prices.

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