Matt’s Mid-Week comments on the USDA report

I hope your week has been a good one so far. I know several of you haven’t had the best week when it comes to the storm that rolled through on Monday night. I know it was a nasty system, toppling grain bins, sheds, and wreaking havoc on the corn crop. With plenty of estimates out there, I’d say we lost at least 200 million bushels of production. Typically, a storm doesn’t have an impact on national yield, but in this case, it certainly has the capability of doing so. Our farm was fortunate and didn’t get any winds strong enough to blow the corn down. While we didn’t get a ton of rain, I have to think we’ll be fine if we don’t get any more. The corn is pretty much finished while the beans could always use ‘just one more rain.’ Keep me posted on how things look for you around your operation. I appreciate the feedback.


The corn and bean markets ended the day on a positive note, …which is really saying something. The USDA August Supply and Demand and Production Report was released at 11 am and had some big surprises. Given corn yield came in well over the average trade guess at 181.8 and beans were well above at 53.3, one would think we’d trade sharply lower. However, after an initial move lower by beans, traders looked at the carry-out levels, which weren’t too burdensome, and the market turned around. My gut tells me a big reason for this is a mostly dry forecast for a good chunk of the corn-belt over the next ten days. Outside markets were supportive as September crude oil settled up $1.06 at $42.67, which was 23 cents off the high and $1.14 off the low. The DOW was up 252 points at 27,866. The Dollar was weak again, settling down .20, closing at 93.4.


Corn – The corn market performed admirably on Wednesday, given the new data from the USDA. September corn closed 3 cents higher at $3.14 ½. This was a half-penny off the high and 6 ½ cents off the low of the day. The EIA report from the Department of Energy showed corn usage for ethanol off from a week ago at just over 92 million bushels of corn usage…down over a million bushels from last week. The USDA report was a bit of a shock, and the way the market performed was more-so. With a yield of 181.8, the carry-out came in at 2.758 billion bushels. This is well under what I would have assumed given the big yield. The USDA ramped up corn export and feed usage, boosting overall usage by 150 million bushels. The concerning thing for me moving forward is the USDA has boosted corn demand from this marketing year to next by over a billion bushels! Yes, cheap corn is supposed to cure cheap corn…but they might be a little aggressive. I think corn is range-bound…I don’t see any huge rally, and I would imagine those thoughts of corn plummeting to $2.80 are less likely at this point.


Soybeans – Soybeans also performed rather well given the hand the USDA dealt them Wednesday. November beans settled up 9 ½ cents at $8.83. The close was a half-penny off the high and 16 cents off the low of the day. The USDA report was certainly not bullish in the case of beans, although a look at the daily close would lead one to believe otherwise. With a yield forecasted at 53.3, we were safely above the average trade guess at 51.4. As with corn, carry-out wasn’t as burdensome as you may think, given the big yield. With exports raised 75 million bushels and overall usage up 100 mb, carry was pegged at 610 mb. While bean yields are likely to rise in future reports, IF this crop finishes well, it’s nice to see how strong demand is performing. Almost every day, we get reports of more export sales as we did on Wednesday morning with China buying 258 mt of corn while ‘unknown’ purchased 120 mt of US corn. I wouldn’t at all be surprised to see this 610 mb end up below 500 mb even if we see an uptick in yields. Given all this…I’m still pricing beans on strength as I can lock in income. It’s tough to ignore if you’re in an area where you feel great about how current yield projections affect your profit margins.

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Matt Bennett

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