EHedger Afternoon Grain Commentary 11/9/12
Nov 09, 2012
It was a weak day at the Chicago Board of Trade after a bearish USDA report. December corn closed 2 ½ cents lower at $7.38 ¾, January soybeans closed 44 ½ cents lower at $14.51 ¼, and December Chicago wheat down 16 cents at $8.86 ½.
At 7:30 this morning the USDA released its monthly WASDE report with updated production estimates for corn and soybeans. The market was pricing in higher yields for soybeans but the USDA increased production above even the highest estimate. Total soybean production came in at 2.971 billion bushels when the average guess was 2.891. Total corn production was estimated at 10.725 billion bushels when the average guess was 10.629.
Most of the extra soybean production was immediately attributed to higher export sales estimates as it should be with our current export sales pace. The ending carryout for US soybeans is now estimated at 140 million bushels. This is still a very tight carryout situation when looking at 3.021 billion bushels in use this year. January soybeans settled just above the 200 day moving average which means we filled the long term gap going back to the 4th July.
The world corn and soybean carryouts were both higher than the October estimates. World production outside of the United States was unchanged besides a slight decline in EU Wheat.
Where do we go from here? With the extra corn and soybean production the US supply and demand tables are a little more flexible. We still believe the downside potential is limited as long as we don’t see a major outside market influence such as simultaneous declining energy and equity markets. Soybean export demand still remains strong and the world stocks to use level for corn is still extremely tight.
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USDA REPORT AND ESTIMATES:
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