While USDA adjusted acreage and production for corn and soybeans as the market expected, the numbers for U.S. wheat stocks tightened, supporting wheat prices after Friday's USDA reports.
"The FSA acreage is the main influence here. They did about what we expected. They cut the corn acreage by 400,000, they cut the beans by 1.1 million, which more than offset the increase in the soybean yield raised by .1 to 47.2 bu. per acre. But they raised Brazilian soybean production by 3 million tons and cut the U.S. exports by 50 million. So we shrank the crop slightly because of the acreage cut, but we shrank the consumption because of the exports, so we ended up getting the ending stocks that we were looking for, which was 425 million," said Alan Brugler, president of Brugler Marketing and Management. "With corn, you had the acreage cut, and that shrank ending stocks. I was kind of surprised they raised corn yield to 168 [bu./acre]. But a lot of times when you cut harvested acres, you raise the average yield on what’s left."
In the Oct. 9 Crop Production report, USDA estimated that farmers will produce 13.6 billion bushels of corn on 80.7 million acres, with an average yield of 168 bu. per acre. For soybeans, USDA forecasts farmers will produce 3.89 billion bushels on 82.4 million acres, with an average yield of 47.2 bu. per acre.
In terms of the market's reaction to Friday's reports, it was a bit of a shrug. "In a nutshell, I would call the report slightly negative for corn and beans. The reaction is almost non-perceivable," said Brian Doherty, senior market adviser for the Stewart-Peterson Group. "The demand for beans is really good, but the yield numbers seem fairly impressive. For corn, I’d say it’s a 50-50 split on what people expected on yield."
For wheat, the market shrugged off the higher global wheat stocks numbers, with Doherty highlighting the dryness in the Southern Hemisphere.
"The one market that has some life is wheat, which is up a few cents, which is not a lot, but that’s considering projected world carryout is up," he said. "It think the focus is on the beginnings of what could be dryness in Australia, the Black Sea Region. The Southern Hemisphere has drier conditions that might be directly correlated to the El Nino effect. And so the market tried to go lower, seemed to run out of selling interest and the buyers are right back on board, at least shortly after the report. I think these markets are going to factor in more outside influence."
Meanwhile, Brugler noted the shifts in wheat stocks numbers. "The only thing I saw on wheat was they cut the U.S. wheat exports by 50 million, and they cut the crop as expected. The one that surprised me was they raised the Australian wheat crop 100 million. The talk was that they were going to lower it because of the El Nino damage in the eastern part of the country, but they raised it instead. We’re up a couple cents today on wheat because U.S. stocks tightened."