How the market reacts is all that counts now
Oct 12, 2017
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It is always a bit sad when the biggest news to talk about is the latest USDA estimate (key word there is the estimate), but today it would seem that is the ONLY news that we have to focus on. The report itself has provided little in the way of surprise. The corn yield and production figures are a bit higher than estimates with production at 14.28 billion versus an estimate of 14.20 and yield at 171.8 bpa versus 170.1. The mitigating factor here was a slight cut in the harvested acres moving from 83.49 to 83.12. The initial price reaction was rather muted, but buying has seemed to pick up, which could suggest the bear feels that this was their last best chance for negative news. Bean production leaned just a smidge to the positive side with a total figure of 4.431 billion using a yield of 49.5, which compared with the expectations of 4.447 and 50 bpa. Here the harvest acreage number was actually bumped a bit higher moving from 88.73 last month to 89.47 this. Obviously, all those spots drowned out in the spring were replanted, and there was more double crop than previously expected (you are supposed to hear the sarcasm in that comment). The positive reaction here was more pronounced, and once again, it would appear that the bear has little ammunition to keep pressing the downside. Ending stocks estimates break down as follows; Corn at 2.34 billion versus an expected 2.289 and last month’s number of 2.335. Beans at 430 million versus an expected 447 and last month at 475 million. Finally for wheat, projected ending stocks of 960 million compared with an estimated 946 million and September estimate of 933 million. Last but certainly not least, global ending stocks broke down as follows; Corn at 200.96 MMT versus an expected 201.91, beans at 96.05 MMT compared with 96.48 and wheat at 268.13 MMT versus 262.8. As is always the case, the market reaction to the numbers is often more telling than the reports themselves, and as it stands at this moment, the reactions are quite favorable and if we can maintain that for the close, should be a solid indication that harvest lows are now behind us.