Markets slid after Monday’s bearish USDA report, which raised soybean yield estimates to a record 50.6 bushels per acre, the highest in 10 years, according to some estimates.
“This is a brand new record, higher than any analyst’s guess, and a good surprise on soybean production,” said Rich Nelson, chief strategist of Allendale, who called the report “bearish” on soybeans, but “neutral” on corn. He said it was the largest increase in soybean yield in 10 years based on percentage.[CW1]
The higher soybean ending stocks “are going to be an issue, because at this point in the year, it’s hard to argue for higher exports,” Nelson said.
Analysts were expecting “a bullish surprise, because we were more focused on exports,” he explained.
Wheat was also neutral, with increased production offset by increased exports, according to Nelson.
Another analyst, DuWayne Bosse of Bolt Marketing in Britton, S.D., said the bearish report would send prices trending down to contract lows of $9.37 for November soybeans and $3.15 for December corn.
“We’re pushing the envelope with all three at near-record levels (corn, soybeans and wheat),” commented Randy Martinson with Martinson Ag Risk Management during an MGEX conference call, referring to crop production.
In early trading, Monday, September soybeans fell 12.6 cents to $9.844, while December corn dropped 1.4 cents to $3.39.
Key numbers from Monday’s report:
Corn yield of 174.4 bushels per acre, which is more than the average trade guess of 173.4 bushels per acre, according to news agency reports.
Corn production of 15.093 billion bushels, which is greater than the average trade guess of 14.951 billion bushels.
New corn ending stocks of 2.384 billion bushels, which is above the trade estimate of 2.329 billion bushels, and the highest since 1987/88.
Old crop corn ending stocks of 1.706 billion bushels.
Soybean yield of 50.6 bushels per acre, which is more than the average trade guess of 49.2 bushels per acre.
Soybean production of 4.201 billion bushels, which is greater than the average trade guess of 4.096 billion bushels.
New soybean ending stocks of 365 million bushels, which is more than the average trade guess of 330 million bushels.
Wheat yield unchanged of 52.6 bushels per acre and wheat production of 2.321 billion bushels .
New wheat ending stocks of 1.100 billion bushels, which is less than the average trade guess of 1.115 billion bushels.
The report lowered corn use by 25 million bushels for 2016/17 to 14.475 billion bushels. Feed and residual use was lowered slightly to 5,650 million bushels. The average corn farm price was $2.90-$3.50.
Additional reporting by Ben Potter.