The September WASDE was a disappointment for the bulls, especially on corn. Despite lower corn yields, an increase in harvested acres more than offset, resulting in higher ending stocks verses August. Meanwhile, on soybeans, USDA once again tightened the balance sheet, but it remains above estimates.
As expected, corn yields dropped in many states with Illinois and Minnesota both down 3 bu. and Nebraska was down 7 bu. The 1.3 bu. per acre drop nationally was disappointing, according to Ted Seifried, market analyst with Zaner Ag Hedge.
“A lot of analysts and brokers, for that matter, were really looking for numbers to drop a lot more than that, and the fact they didn’t is the biggest problem we have here today,” he says.
USDA incorporated the August FSA data and came up with 800,000 more harvested acres. Seifried says the $5.91 crop insurance guarantee and some lower input costs in the spring encouraged more corn. So even with a yield cut, production and corn ending stocks were increased 20 million bushels.
“We’re still well above a 2.2-billion-bushel carryover, and that is a problem based on the fact that production went up, but they didn’t do anything to increase demand,” Seifried says.
For soybeans, USDA lowered yield about as expected by 0.8 bu. per acre, with a 6-bu. drop in Kansas, 3 bu. in Nebraska and 4 bu. in Wisconsin. USDA only raised harvested acres by 100,000, resulting in a 60 million bushel drop in production. But ending stocks dropped only 25 million as USDA cut demand.
Seifried says: “207 million bushels was the average trade guess for carryover on a yield that was slightly higher than what USDA gave us. The fact that yield came in lower than the trade guess, but they had a carryover into 220 million bushels instead of like 205, that’s rough. USDA cut 35 million bushels off of exports and about 10 million bushels off of crush.”
On wheat, USDA left U.S. ending stocks unchanged at 615 million bushels, but lowered world carryover 7 million metric tons.
For cotton, production and ending stocks were lowered on a U.S. and world basis.
