Soybean futures soared Thursday after a bullish USDA report pushed production estimates lower than expected.
The report was also bullish for wheat, with U.S. farmers slashing winter wheat plantings by 3.754 million acres to 32.383 million acres, the lowest in more than a century, according to Reuters. Analysts had been expected winter wheat plantings of 34.139 million, a Reuter survey showed.
January soybeans soared 29 cents, closing at $10.32 on lower production and yield numbers. USDA also cut soybean ending stocks by 2.355 billion bushels 420 million bushels. Chicago March wheat rose 7 2/5 cents at $4.26 1/5 following the report.
March corn rose 1 cent to $3.85 ¼ following the release of a slew of reports that included the World Agricultural Supply and Demand Estimates and Crop Production Annual Summary. USDA also released , Quarterly Grain Stocks and Winter Wheat Seedings.
Rich Nelson, chief strategist of the marketing firm Allendale in McHenry, Ill, said the slightly bullish report lifted soybeans, but “didn’t change the big picture.”
“There are two big-picture bullet points. Soybean production revised down due to both a revision lower in acreage," said Nelson, "and dropped yields, which was a surprise for all of us.” The report also kept soybean exports unchanged.
“This does give us a moderate bounce for today maybe tomorrow but it does not change the big picture, which still is a generally bearish outlook,” Nelson said.
Corn production dropped slightly, "which was kind of expected, due to lower acreage. The trade was talking about a drop in yields as well " Nelson said.
USDA raised corn ethanol and dropped corn feed residual by 50 million bushels. “The positive part is that the corn for ethanol more than offset lower feed residual numbers,” Nelson said.
Randy Martinson, an analyst with Martinson Ag Risk Management said the drop in wheat acres was also larger than expected.
“Everyone was anticipating a drop in winter wheat acres, but we didn’t expect this big of a drop,” he said. “You’d have to say wheat is bullish, corn is somewhat neutral and soybean was a little negative. That’s how todays’ report looked."
Although the WASDE report was “friendly to soybeans, with ending stocks lowered to 420 million bushels, it still isn’t likely to push soybeans above a $10 range, according to DuWayne Bosse of Bolt Marketing in Britton, S.D.
Bosse said the report was “neutral for corn,” with concern about reduced wheat acres being replanted with corn. “The report confirmed we have a ton of corn, and one other negative thing those winter wheat acres, will get planted to something, which is why you see November soybeans are not rallying as high as March soybeans,” he said.
“As far as wheat goes, there might need to put a little premium because there are less acres than expected,” he added.
Another analyst, Mike Zuzolo, president of Global Commodity Analytics. based in Atchison, Kan. said the corn and soybean yield reduction “helps revive the South America weather market and promotes tightening cash basis for nearly-commercial elevators in my view.”
Here are the key numbers for the WASDE a d Quarterly Grain reports:
Corn yield of 174.6 bushels per acre, which is less than the average trade guess, according to Reuters, of 175.1 bushels per acre.
Corn production of 15.148 billion bushels, which is less than the average trade guess of 15.196 billion bushels.
Corn ending stocks of 2.355 billion bushels, which is less than the average trade guess of 2.385 billion bushels.
Corn quarterly ending stocks of 12.384 billion bushels, as of Dec. 1
Soybean yield of 52.1 bushels per acre, which is below the average trade guess of 52.7 bushels per acre.
Soybean production of 4.307 billion bushels, which is less than the average trade guess of 4.374 billion bushels
Soybean ending stocks of 420 million bushels, which is below the average trade guess of 468 million bushels.
Soybean quarterly grain stocks of 2.895 billion bushels.
Wheat ending stocks of 1.413 billion bushels for 2016, which is slightly more than the trade guess of 1.41 billion bushels.
When quarterly wheat ending stocks were 2.073 billion bushels as of Dec. 1, up from 1.746 billion a year earlier.