Corn and soybean futures are mixed headed into midday, after USDA increased its forecasts for new crop carryout of both crops, ignoring forecasts for hotter and drier weather that drove rallies earlier this week.
Instead, the government maintained its forecasts for big production, keeping projected ending stocks burdensome. That prospect weighed on prices in the minutes after the reports came out, but the market quickly reverted to trading the weather as bulls and bears waited for updated forecasts to trickle out from computers.
Old crop corn and soybean futures firmed as carryout of those crops remains very tight. USDA cut its forecast for Sept. 1 corn inventories by 40 million bushels to 729 million, raising its forecast for feed usage by 50 million bushels, offset by a 10-million bushel hike in imports. The agency said old crop feeding would increase due to the late harvest of the 2013 crop.
USDA trimmed its forecast of new crop production slightly by reducing harvested acres in line with the June 28 report that many dismissed as too high in the first place. Still, the government kept its projected yield at 156.5 bpa, which would result in a crop of just under 14 billion bushels. USDA also cut its forecast for both feed usage and exports by 50 million bushels each, raising projected ending stocks by 10 million bushels to 1.959 billion bushels. The average price for the crop was left unchanged at $4.80 a bushel.
For soybeans, USDA kept its old crop carryout estimate unchanged at 125 million bushels, but raised its forecast for production by 30 million bushels, reflecting the increase in acreage found June 28. With demand estimates held steady, the bigger 3.42 billion bushel crop raised projected 2013 carryout to 295 million. The average price was kept unchanged at $10.75.
While corn and soybean futures churned in the wake of the reports, wheat prices firmed thanks to a significant cut in 2013 carryout. Though USDA increased the size of the crop by 34 million bushels due to an increase in winter wheat production, most of that was offset by the smaller 2012 carryout found in the June 28 stocks report. Though feed usage was dropped 10 million bushels, the agency upped its forecast for exports by 100 million, noting strong interest from China. That cut ending stocks to 576 million, down 83 million, though it only raised the average price forecast for the crop by 20 cents to $7.20.