PF Reaction to USDA's "September Surprise"

September 28, 2012 03:13 AM
 

SEPT. 1 GRAIN STOCKS

CORN: 988 million bu.; trade expected 1.126 billion bu.
-- compares to 3.149 billion bu. on June 1; 1.128 billion bu. on Sept. 1, 2011
BEANS: 169 million bu., trade expected 132 million bu.
-- compares to 667 million bu. on June 1; 215 million bu. on Sept. 1, 2011
WHEAT: 2.104 billion bu.; trade expected 2.281 billion bu.
-- compares to 743 million bu. on June 1; 2.147 billion bu. on Sept. 1, 2011

USDA delivered another "September surprise" for the corn market in the Quarterly Grain Stocks Report, but this one was the opposite of the past two years. In those years, corn harvested before Sept. 1 resulted in a bigger-than-expected Sept. 1 corn stocks tally. This year, despite the biggest pre-Sept.-1 corn harvest on record, corn stocks came in 138 million bu. below pre-report trade expectations.

USDA says, "Old-crop corn stocks in all positions on Sept. 1, 2012, totaled 988 million bu., down 12% from Sept. 1, 2011. Of the total stocks, 314 million bu. are stored on farms, down slightly from a year-earlier. Off-farm stocks, at 675 million bu., are down 17% from year-ago. The June-August 2012 indicated disappearance is 2.16 billion bu., compared with 2.54 billion bu. during the same period last year.

On soybeans, USDA says, "Old-crop soybeans stored in all positions on Sept. 1, 2012, totaled 169 million bu., down 21% from Sept. 1, 2011. Soybean stocks stored on farms totaled 38.3 million bu., down 21% from year-ago. Off-farm stocks, at 131 million bu., are down 21% from last September. Indicated disappearance for June-August 2012 totaled 498 million bu., up 23% from the same period last year."

USDA also made some adjustments to the size of the 2011 bean crop. It says, "Based on an analysis of end-of-marketing-year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2011 soybean production is revised to 3.09 billion bu., up 37.5 million bu. from the previous estimate. Planted area is revised up 70,000 acres. Harvested area is revised up 140,000 acres to 73.8 million acres. The 2011 yield, at 41.9 bu. per acre, is up 0.4 bu. from the previous estimate."

On wheat, USDA says, "All wheat stored in all positions on Sept. 1, 2012, totaled 2.10 billion bu., down 2% from year-ago. On-farm stocks are estimated at 573 million bu., down 9% from last September. Off-farm stocks, at 1.53 billion bu., are up 1% from year-ago. The June-August indicated disappearance is 908 million bu., up 27% from the same period last year."

 

 

ANNUAL SMALL GRAINS SUMMARY

ALL WHEAT: 2.269 billion bu.; trade expected 2.270 billion bu.
-- compares to 2.268 billion bu. in Aug.; 1.999 billion bu. in 2011
ALL WINTER WHEAT: 1.645 billion bu., trade expected 1.677 billion bu.
-- compares to 1.683 billion bu. in Aug.; 1.494 billion bu. in 2011
HRW: 1.004 billion bu.; trade expected 1.009 billion bu.
-- compares to 1.012 billion bu. in Aug.; 780 million bu. in 2011
SRW: 419.8 million bu.; trade expected 432 million bu.
-- compares to 435 million bu. in Aug.; 458 million bu. in 2011
WHITE WINTER: 221.5 million bu.; trade expected 235 million bu.
-- compares to 236 million bu. in Aug.; 256 million bu. in 2011
OTHER SPRING : 542 million bu.; trade expected 507 million bu.
-- compares to 500 million bu. in Aug.; 455 million bu. in 2011
DURUM: 82 million bu.; trade expected 86 million bu.
-- compares to 86 million bu. in Aug.; 50 million bu. in 2011

The market did an excellent job of anticipating the all-wheat production estimate in USDA's Annual Small Grains Summary. The all-wheat estimate of 2.269 billion bu. is just 1 million bu. below the average pre-report trade estimate.

All winter wheat, however, did come in 32 million bu. below the average pre-report trade estimate. Hard red winter (HRW) production is estimated 5 million bu. below trade expectations and soft red winter (SRW) came in 15.2 million bu. below the average pre-report trade guess. White winter wheat production is 13.5 million bu. below trade expectations.

Durum wheat is also just 4 million bu. below the average pre-report trade estimate.

USDA also made some changes to the planted and harvested acreage estimates for all-wheat. USDA now puts planted acres at 55.736 million, down 281,000 from the June Acreage Report. Harvested wheat acres are now estimated at 48.991 million, up 165,000 from the June Acreage Report.

USDA puts the national average all-wheat yield at 46.3 bu. per acre, up 2.6 bu. from year-ago and matching the record high in 2010.

The national average winter wheat yield is put at 47.2 bu. per acre, down 0.8 bu. per acre from the August Crop Production Report.

The national average spring wheat yield is put at 45.0 bu. per acre, up 2.2 bu. per acre from the August Crop Production Report.

 

 

MARKET REACTION

December corn futures rallied about 30 cents on the release of the Quarterly Grain Stocks Report and are now trading 5 to 6 cents below the post-report reaction high. Still, corn futures are 15 to 20 cents higher after the report.

November soybean futures have seen extremely volatile trade following the report and posted a 28-cent trading range in the first two minutes of post-report trade. Bean futures are now trading 3 to 5 cents lower.

December Chicago wheat futures rallied sharply on release of the data and are now consolidating about a nickel below the session high. Wheat futures at all three exchanges are trading mostly 15 to 20 cents higher.

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