Floor Talk August 12 (Report Day)

[marketeye]

A BEARISH REPORT: Soybeans Drop 62¢, Corn falls 19¢ on the Report

USDA/WASDE SAYS:

U.S. corn crop= 13.7 billion bushels  vs. the trade expectation of 13.318 billion bushels.

U.S. soybeans= 3.92 billion bushels  vs. the average analysts' production estimate is 3.719 billion bushels, compared with USDA’s July estimate of 3.885 billion.

Yield:

Corn=    bu./acre vs. the average analysts estimate of 164.4 bushels per acre.
Soybeans=      bu./acre vs. the average analysts estimate of 44.6 bu./acre and the July USDA yield at 46.0 bushels per acre.

U.S. Carryout:

Old-crop U.S. corn ending stocks= 1.77 billion bushels vs. the trade's estimated at 1.781 billion bushels, compared with the USDA’s July estimate of 1.779 billion.

For soybeans, the U.S. old-crop carryout= 240 million bushels vs. analysts at 247 million bushels vs. the USDA’s July estimate of 255 million.

U.S. 2015-16 corn carryout=  1.71 billion bushels vs. the trade's estimate of 1.427 billion bushels, compared with the USDA’s July estimate of 1.599 billion.

Soybean carryout=  470 million bushels vs. the analysts at 305 million bushels vs. the USDA’s previous estimate of 425 million bushels.

On Wednesday, the USDA is expected to peg the 2015-16 wheat carryout at 753 million bushels vs. the trade's expectations of 858 million bushels vs. the USDA’s July estimate of 842 million.

TRADE REACTION
--Dustin Johnson, EHedger Inc. grain analyst, says that the report clearly surprised the analysts today with higher yields.  "The problem is this market setup is so poor.  The funds are long and underwater and aren't getting rescued by the USDA anytime soon.  The only way for this to turn around in our opinion is dramatic yield losses reported at harvest.  The FSA acreage data on Monday and a falling dollar may get some small rallies to occur in the mean time, but we are not holding our breath for better prices after this report.  If yield reports come in strong through harvest we could see last year's low taken out below $3.30."

--Sal Gilbertie, Teucrium Trading, says that the USDA has really put the pressure on the markets.
“Rain has clearly made grain, and lots of it. But lower prices are definitely stimulating demand around the world, because even with reduced projections from last month, record global usage is still projected for corn, soybeans and wheat,” Gilbertie says.
The report’s biggest surprise to traders is the upward revision of yields in the US for corn and soybeans, which means supplies are adequate to meet anticipated record demand, Gilbertie says.
“Globally, farmers continue to reap the benefits of near perfect growing conditions, with US farmers at a slight disadvantage due to the high value of the dollar. However, today’s price lows are approaching cost of production levels in the US by many analyst’s estimates, especially in corn, which does put a spotlight on farm economics moving forward,” Gilbertie says.


---Scott Shellady, CME Group floor trader, says the reports are negative all around.
“The numbers have caught everyone off guard,” Shellady says.

---Tom White, FuturesRoad.net owner and CME Group corn trader, says that the report has corn locked limit down.
“We did, in fact, return to lows in the corn market and create new lows. In fact, corn is locking limit down, temporarily at 357 1/4,” White says.
White adds, “As you know, this is fueled by what I believe to be the main story and that is the devaluation of the Yuan by the Chinese which accelarates the technicals in a hurry. The fear of lack of demand now by the Chinese will play havoc with prices in the commodities. The range of currency now is so steep the Chinese do not want to participate in dollar dominated goods,” White says.


---Jack Scoville, The PRICE Futures Group senior market analyst, says the reports have traders scratching their heads.
“A bearish report with super high yields estimates that caught the trade leaning the wrong way, again. Pretty wild stuff here today.  So far, I’m not seeing anything for the bulls anywhere, that will be the challenge now, find something positive.”
 
---Jacob Burks, WedBush Futures grain analyst, says this report proves whyt it’s hard to guess the market.
“A two bushel increase in corn and nearly a bushel increase in soybeans only does one thing, it reminds you of why you don’t guess market direction,” Burks says. Let the arguing begin about how the USDA numbers are wrong.  Fact is it doesn’t matter. It’s what the numbers are now.  The market movement gives opportunities and takes them away.  Another year to emphasize the importance of using options.”

Mike

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At the close:

At the close, the Sept. corn futures settled 19 1/4 cents lower at $3.57, but did lock the 30¢ daily limit down at $3.46. Dec corn futures settled 19 1/2 cents lower at $3.68, and hit limit down at $3.57 during the session. 

Sept. soybean futures closed 62 1/2 cents lower at $9.18 1/2. Nov. soybean futures finished 61 1/2 cents lower at $9.10.

Sept. wheat futures ended 15 cents lower at $4.92.

Sept. soymeal futures closed $18.00 per short ton lower at $323.70. Sept. soyoil futures closed $1.06 lower at $29.10. 

In the outside markets, the Brent Crude oil market is $0.33 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 37 points lower.

Mike

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At mid-session:

At mid-session, the Sept. corn futures are trading 18 cents lower at $3.57, did lock limit down at $3.46. Dec corn futures are 19 cents lower at $3.68, and hit limit down at $3.57. 

Sept. soybean futures are trading 54 1/2 cents lower at $9.26. Nov. soybean futures are trading 53 1/2 cents lower at $9.18.

Sept. wheat futures are 13 cents lower at $4.94.

Sept. soymeal futures are trading $14.80 per short ton lower at $326.90. Sept. soyoil futures are trading $1.25 lower at $28.91. 

In the outside markets, the Brent Crude oil market is $0.03 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 153 points lower.

Mike

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At 10:30am:

Weekly ethanol production came in higher Wednesday, according to the Renewable Fuels Association press release. "According to EIA data, ethanol production averaged 965,000 barrels per day (b/d)—or 40.53 million gallons daily. That is up 4,000 b/d from the week before. The four-week average for ethanol production stood at 966,000 b/d for an annualized rate of 14.81 billion gallons.

Stocks of ethanol stood at 18.5 million barrels. That is a 3.7% decrease from last week and the lowest of the year. Ethanol stocks are roughly 15% lower than February levels, yet ethanol blending is up roughly 7%."

Mike

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At the open:

At the open, the Sept. corn futures are trading 3 1/4 cents higher at $3.79, Dec corn futures are 3 cents higher at  $3.90. 

Sept. soybean futures are trading 3/4 of a cent higher at $9.81. Nov. soybean futures are trading 1/4 of a cent higher at $9.71.

Sept. wheat futures are 3 1/4 cents higher at $5.10.

Sept. soymeal futures are trading $1.40 per short ton higher at $343.10. Sept. soyoil futures are trading $0.05 lower at $30.11. 

In the outside markets, the Brent Crude oil market is $0.46 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 169 points lower.

Mike

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At 6:30am:

Early calls: Corn 3-5 cents higher, soybeans 2-4 cents lower, and wheat 3-5 cents higher. The USDA will release its August Supply/Demand and Crop Production Reports at 11:00am CT.

Trackers:
Overnight grain, soybean markets = Trading mostly higher.
Brent Crude Oil = $0.65 higher.
Dollar =Lower.  
Wall Street = Seen lower, pressured by China's second day devaluing of its currency.

World Markets = Europe stocks were lower, Asia/Pacific stocks were lower.

More in a minute,

Mike

[Blacksandfarmer]

Mike, will PP acres from Ohio, Indiana and Illinois be counted on the report? Or is it just PP acres from Arkansas, Kansas and Missouri?

[marketeye]

Blacksandfarmer,

Arkansas, Kansas and Misssouri for sure. Not sure about the other states.

Mike

[timetippingpt]

They "resurveyed". This will not be a PP count, just a new survey.

[elcheapo]

eagle eye.......how are your market friends digesting this ?  from the quotes it's "so what", "just another day at the office"....

everyone was leaning the other way.  don't they disagree with the usda data ?  several have already said this

is "the truth"......it that's the kind of people we have......how in the $%@# are the rest of us who weigh fundmentals

and other factors, to come up with a market "plan"

another place reported, that the general reaction is, "shock and awe".

how are the chicago crowd feeling, with strong indications that the numbers are just plain wrong, and how can they

justify trading off the "plain wrong" data ?

I'm just in shock how they can come up with these numbers.

[marketeye]

el cheapo,

Some of them don't believe the numbers are to blame for the complete fallout of the farm markets. Instead, they think it's the devaluing of the yuan that China is doing that is the cause of the market dive. Others can't believe the eastern Corn Belt data from the USDA. The validity of the USDA's ear weight, that is estimated to be on-par with a year ago, has some baffled. In addition, how can USDA's Vilsack announce disaster aid for 53 counties in Indiana and 87 counties in Illinois, yet his same agency releases big crop estimates on the same day?

Mike

[Mike central IA]

Our "friends" at the USDA might have bumped the yields a little higher than most of us were guesssing, but they almost had to in order to keep the carryout in the range they were aiming for. I don't think the carryout numbers are any more bearish than they were, so maybe not everything is gloom and doom. When the REAL yields are realized the carryout is going to drop. Maybe a bunch?!?