Grain futures traded mostly lower toward midday, trying to trim losses after moving sharply lower in the wake of the latest USDA data that provided little, if any, support for bulls.
New crop contracts made session lows ahead of the report, with July corn and soybeans also erasing earlier gains. July soybeans tested last week’s nine-month high early, before reversing lower into the report, but was able to edge back into positive territory. USDA made no change to its forecast of old crop soybean carryout, leaving its estimate at 125 million bushels and keeping the trade concerned about tight old crop inventories. The government further supported that notion by tightening its forecast of world old crop carryout by 45 million bushels, more than expected.
New crop soybeans were another matter, however. The government made no change in acreage or yield from its May projections, leaving the crop at a record 3.39 billion bushels, keeping carryout at 265 million. Still, USDA increased its average cash price forecast for the crop by 25 cents, to $10.75.
The government did cut its statistical estimate of corn yields to 156.5 bpa, down 1.5 bpa from May. But as we suspected, the agency was not willing to make changes on acreage yet, leaving it at 97.3 million. That left total production at just over 14 billion bushels, which would easily be a record.
Carryout fell, but only by 55 million bushels, to 1.979 billion. Though USDA increased its estimate of ethanol production, it cut its forecast for feed usage, in part due to increased availability of DDGSs. The projected average price for 2013 was raised a dime to $4.80.
Old crop carryout was increased 10 million bushels. Today’s separate report on ethanol production for last week showed usage remained strong, sending biofuel stocks to their lowest level since the government began tracking data weekly three years ago. That helped USDA raise its forecast for ethanol usage of 2012 corn, though that was offset by increased imports and weaker exports.
Wheat prices slipped to new three-week lows after the report. USDA increased its forecast of June 1 old crop stocks by 15 million bushels due to weaker exports, and raised its estimate of 2013 winter wheat production by 23 million bushels; the trade expected a small reduction. USDA offset the increased size of the crop with an increase in exports, trimming projected carryout by 11 million bushels to 659 million. World stocks were also cut, helping the average cash price for the crop go up 10 cents to $6.90.