USDA on Thursday trimmed bushels from last fall’s big U.S. corn and soybean harvests, with the lower soybean production surprising many traders who had expected an increase.
The corn harvest of 15.15 billion bushels is down from the approximately 15.2 billion that was both the average trade forecast and USDA’s estimate in December.
Soybean harvest was revised down to 4.31 billion bushels, which was contrary to average trade forecasts of about 4.37 billion. USDA in December had forecast 4.36 billion.
Winter wheat acres fell more than expected to 32.4 million, the lowest in more than 100 years as unprofitable prices had farmers switching to other crops.
Chicago soybean futures sped higher after the report with the January and March futures up about 15 cents in early afternoon. Prior to the report the contracts were about 2 cents lower for the day. Corn futures dropped a little to trade about 3 cents lowest, while the winter wheat markets moved higher.
“Look for the market to quickly digest these numbers and move on. Old crop soybean prices are getting a lift from the smaller 2016 crop. Now the question is whether demand will be stronger than forecast to bring ending stocks down more,” said Bryce Knorr, Farm Futures senior grain analyst.
Export sales and shipments have been robust and Knorr said that business could prompt more downward revision in USDA’s ending stocks.
Soybean ending stocks on Thursday came in at 420 million bushels, down from December’s 480 million. The decrease was due to the smaller crop as exports and the crush were unchanged from December. In the USDA’s weekly export sales report released earlier on Thursday, year-to-date export sales as of January 5 are up 27% from a year ago.
Soybean export sales have slowed in recent weeks and could slow further as global buyers, particularly China, make their seasonal shift to South America.
“If March futures can hold its break out above the December resistance line, the market could have potential for a test of $10.40 to $10.50,” said Knorr. In midday trading on Thursday, March was up 18-1/2 cents at $10.30 a bushel.
The corn crop of 15.15 billion was a little smaller than trade forecasts, but bigger than what Farm Futures detected in its annual survey. USDA’s reduction trimmed ending stocks to 2.36 billion from December’s 2.4 billion. Exports remained at 2.225 billion, while feed use was cut to 5.6 billion from 5.65 billion and corn for ethanol was raised to 5.325 billion form 5.3 billion.
“Usage for ethanol could be greater than the government expects, thanks to record production the last few weeks,” said Knorr. “Still, (corn) stocks are at record levels, giving the market little reason to rally until the trade turns its attention to 2017 planted acreage.”
Winter wheat acreage of 32.4 million surprised the trade, which, on average, was looking for a number north of 34 million.
“Many of those (wheat) acres will move into soybeans, and farmers likely will cut corn acres too. That prospect could be a drag on the soy complex sooner than later, unless farmers on the northern Plains decide to push spring wheat seedings,” said Knorr. “Exports of that class remain strong, with the market making new seven-month highs today.”
Year-to-date spring wheat exports are up 36% from a year ago at nearly 253 million bushels.
Click the link below for more charts.