Many U.S. producers likely will be worried about the soybean situation coming off of Friday’s USDA production estimates, says Kevin Van Trump, owner of Farm Direction. While the government raised production unexpectedly high—up 1.5 bushels from last month to an average yield of 39.3 bushels per acre–most of those gains were chewed up by demand.
"We may be in for a little bit of a setback," Van Trump says. That’s especially true given estimates that Brazil is on pace for a record soybean crop. While Argentina is experiencing flooding conditions, he says, a lot of people think farmers there will simply take out some corn acres and plant beans instead.
The trade really needs beans to be the leader, but corn may jockey into the leadership role in 2013, when U.S. exports pick up a bit, Van Trump says.
Corn production estimates are slightly higher in the USDA report, more so than the average trade guess had been. Exports and ethanol remained unchanged, though projections for production in Europe and Mexico were lowered slightly. USDA says yields will average 122.3 bushels per acre, up 0.3 bushels from October.
Meanwhile, Van Trump says the most surprising thing about Friday’s WASDE report is the jump in the world wheat ending stock number. Stocks were expected to be lowered substantially, but instead the USDA only lowered Australian wheat production expectations, leaving countries such as Argentina and Ukraine untouched.
In recent days, the U.S. had become the cheapest provider of wheat, which drove a bit of a rally, Van Trump says. But the U.S. was substantially behind pace early on and has fallen further and further back since then. While some market experts think the U.S. can make up for lost time, Van Trump isn’t so sure. He says there’s a little window of opportunity, given that Australia and Brazil will soon come online with more wheat that likely will be cheaper than what U.S. producers can offer.
While Van Trump thinks additional U.S. wheat acres will be planted next year, he advises people to be careful about jumping on a "big wheat bandwagon." Everything hinges on the weather, he says, and the far-from-normal weather of late has most people a little nervous.
Corn, wheat and beans were a little bearish earlier in the morning, says Tom Grisafi of Indiana Grain Company. He spoke with AgWeb Radio’s Al Pell.
"We also have a lot of pressure here in the outside markets, so that’s not probably helping the situation any with the S&P being down again," Grisafi says.
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Coverage, Analysis of the Nov. 9 USDA Reports
See all of the data, coverage and analysis of today's World Agricultural Supply and Demand Estimates and Crop Production reports.