AM Comments 09/13/16
Tuesday, September 13, 2016, 1:09 PM
Submitted by: Dustin Weiner
Our corn and soybean futures markets slipped lower overnight with yesterday’s (mostly) bearish S&D report setting the tone. For those who haven’t heard/read the details, the USDA estimated the US corn yield at 174.4 bpa, down slightly from the August estimate of 175.1 bpa. Yes, corn yield projections are lower month-on-month but the overall production estimate was 66 million bushels above what the trade thought which makes this a bearish (negative) number in regards to price action.
The USDA estimated the US soybean yield at a record of 50.6 bpa, which was above the August number of 48.9 bpa AND above the average trade guess of 49.2 bpa. This equates to a 141 million bushel gain in production month-on-month. This of course pressured soybean prices and on the charts bean futures put in a key reversal, which suggests a short term high has been established. This helps explain the follow through selling witnessed last night.
Overall – this report wasn’t overly surprising. I do find it interesting when looking at the soybean balance sheet that even though US soybean production was raised 141 million bushels (now at 4.2 billion), the ending stocks projection was only raised 35 million bushels. The updated carryout projection for next summer is now 365m bu (it was 330m bu in August) which doesn’t close the door on potential rallies if issues arise (South American production for example). NOTE: last year at this time the projected carryout was over 400 million and it was chopped down to 195m by the end of the summer… Projections can/will change!
Corn 4 to 6 cents lower
Soybeans 5 to 7 cents lower
Have a great day!
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