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“Happy” USDA report day. As we can see in the price activity this afternoon, Happy, maybe isn’t the right word to describe today. That being said, we did close well off of our lows today heading into the long weekend (Markets closed Monday for Martin Luther King Day). USDA report reaction was bearish for corn and soybeans on larger than expected increases of the size of last year’s US crops. Wheat acreage came in well below expectations but was overshadowed. Geopolitical risks are high going into this weekend.
Highlights from the USDA Report Include….
- Corn and Soybean harvested acres both down from November USDA and down from Average Trade Estimate (Big cut to Kansas due to drought, partially offsetting some effects of higher yields)
- Corn yield up drastically from average trade estimate of 174.9 at 177.30bu/acre. (Biggest upside shock since 2009)
- Soybean yield up from average trade estimate of 49.9 at 50.60bu/acre. (Two year high, but below trend)
- USDA raises corn feed use by 25 million and ethanol use by 50 million bushels to soften the blow of increasing the size of last year's crop by 108 million bushels. No cuts to soybean exports.
- Corn production up from November and up from average trades estimate, same with soybeans
- Corn and bean U.S. carryouts up from December (trade expected drops). Wheat carryout down more than expected.
- World corn carryout up drastically from December (+10 million tonnes) (due to 12mmt increase in China’s crop), soybean and wheat world carryout up marginally.
- Argentine corn steady, beans up 2 million tonnes (more than expected)
- Brazilian corn down 2 million bushels (less than expected), beans down 4 million bushels (close to expected)
The next thing to move the needle in these markets as far as prices are concerned is South American weather and U.S. acreage intentions for 2024. The corn/soy numbers were pretty heavy on Friday, there's no denying. Let's see what next week brings.
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