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MARKET COMMENTARY

August USDA Report

Tuesday, August 12, 2014, 11:08 AM
Submitted by: Dustin Weiner


The USDA report was out and for those who were expecting, or maybe hoping, for some fireworks – it is a bit disappointing (read: quiet).  Corn yields came in below the average trade guess..  At first glance you could say that with the USDA coming in with a smaller crop – corn prices should be higher, maybe even sharply higher.  It is important to note that this crop is still projected to have a record US yield on it, pushing it over 14 billion bushels…. that is a lot of corn.  If you take that and add in the thought that in years like this “big crops get bigger” you could have a hard time going long corn in here which helps explain why prices are struggling to move higher despite the lower yield projected from the USDA.

 

Soybeans.  This one looks a little bearish.  The USDA bumped the yield up a touch and carried those bushels right into a now larger-than-expected carryout for next summer – 430 million bushels.  For reference the carryout this summer is just 140 million bushels so that is a big change on the overall availability of soybeans in the market.  Generally speaking beans still look overpriced when compared to corn.  It feels like the market is still holding onto a weather premium in beans (how will August finish up?).  If we can get another few weeks down the road without cutting into potential soybean production you can make a case for beans to go test some new lows.

 

Some facts/stats from today’s report on the 14/15 crop:

·         USDA corn yield 167.4 bpa, the trade expected 170.1bpa

·         USDA corn carryout 1.808 billion bushels, the trade expected 2.005bb

·         USDA soybean yield at 45.4bpa, the trade expected 45.2bpa

·         USDA soybean carryout 460 million bushels, the trade expected 414mb

 

 

 

 

 

 

 

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