Floor Talk October 9 (Report Day)

[marketeye]

At 11:20am:

USDA SAYS:

Corn= 13.55 billion bushels, with 168 bu./acre yield and 80.7 harvested acres.

Soybeans= 3.88 billion bushels, with 47.2 bu./acre yield and 82.4 million harvested acres.

As a result, corn has dropped 2 cents, soybeans up 3-4 and wheat unchanged.

TRADE REACTION:

--Tom White, corn trader and technical expert, said this before the numbers were released: "The yields in soybeans look good and thinking is continued higher yields on estimates. Conversely, corn is really a crap shoot .... with less harvested than previous years averages it's hard to game the correct yields. I am assuming that since last report downplayed the yields, they (USDA) will continue to lower yields than expected. But, that makes for volatile markets down the road. I think too much rain and wetness in the east is causing some concerns.
Now technically, we have bounced off August 10th lows at 357.50 to .382 retracements in the 393 area .... next point is .50back at 405 and the real area of resistance comes in around 416-420. So, if bullish, look for these areas to be tested."

--Mike North, President Commodity Risk Management Group, says that the two biggest features were, as expected, the yield and acreage.  
“However, the results were opposite of expectation.  While analysts expected mild trimming of yield, the USDA raised the corn and soybean yields from their September release.  Corn was pegged at a national average yield of 168 bu/Acre, up 0.5 bushels from the September number.  Soybeans moved 0.1 bu/acre higher to a 47.2 bushel average.  This created some initial shock as yields were expected lower.
"This report gives the bulls a pat on the back, but not much to take the market any further than it has recently run.  It will now be up to influences outside of the immediate yield conversation to move prices higher," North says.
Soybeans were able to grab a bit of a positive story in the acreage number, losing 500,000 acres from the average guess, but fully 1.1 million acres from the September number.  Harvested acres are now projected at 82.4 million.  Corn was also lower than the average analyst expectation by 200,000 acres, landing at 80.7 million acres (400,000 acres less than the September USDA estimate).
“In the end, bottom line ending stocks numbers slightly exceeded the guess by those in private industry.  Wheat was the big surprise here, scoring a 40 million bushel higher number than analysts expected by losing just 14 million bushels from the September release,” North says.  
With a little help from other regions around the globe, world ending stocks rose 1.9 million metric tons and exceeded guesses by 3.8 million to register a 228.5 MMT inventory.
Corn is now estimated by USDA to leave 1.561 billion bushels in the bin next August 31st, 63 million bushels over the average guess, but 31 million bushels under the September report.  Soybean ending stocks are pegged by USDA at 425 million bushels for the 2015/16 marketing year, 27 million bushels greater than the average guess and 25 million bushels under the September release.

--Sal Gilbertie, Tuecrium Trading, says that after an initial downward price reaction, prices stabilized and even rallied off their lows across the grain markets.
“Traders looked more closely at today’s numbers and saw record high global wheat usage, along with reduced corn and soybean planted and harvested acreage statistics in the U.S. that offset slight yield increases in both commodities,” Gilbertie says.
The global grain balance sheet remains sufficiently supplied with healthy production levels reported throughout the world. Prices in the U.S. remain at or near the cost of production for corn, soybeans, and wheat, he says.
“It is interesting to see that global corn production shows a decline from last year’s estimates of over 3.5%, while global corn consumption only declines by 1%, resulting in lower estimated global ending stocks for corn. Harvest progress is excellent and weather forecasts are good, which means the traditional harvest seasonal price pressures, especially in the corn markets, could remain for the next several weeks through harvest completion,” Gilbertie says.

--Jacob Burks, Wedbush Futures, grain analyst, says the report is a yawner.
“Looks like Informa, the private analyst firm, has the direct connection to what the USDA is doing!  It reduced soybean harvested acres by a half a million acres and raised yield a half a bushel.”

--Alan Brugler, President Brugler Marketing & Management LLC says that USDA cut harvested acres as expected from the FSA data, with corn -400,000 and beans down 1.1 million.  Corn yield up instead of expected down, which is a little negative, but becuase of the lower acreage ending stocks are 31 mbu smaller and the cash average price moved up 5 cents for the year.

USDA had to cut soybean exports by 50 million bu due to the 7.7 MMT lag vs. year ago in sales to date. USDA also hiked projected Brazilian production to a record 100 million metric tonnes.

Yield was as expected at 47.2. Due to acreage cut, ending stocks dropped to 425 million, close to the average trade guess.  USDA left the midpoint cash average price alone at $9.15.

Aussie wheat production was a surprise, as USDA hiked it 1 MMT despite drought concerns there,” Brugler says. .

Mike

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At the close:

At the close, the Dec. corn futures settled 8 1/2 cents lower at $3.82 3/4.  Nov. soybean futures finished 4 1/2 cents higher at $8.85 3/4.

Dec. wheat futures closed 2 1/4 cents lower at $5.09 1/4.

Dec. soymeal futures ended $3.50 per short ton higher at $307.80. Dec. soyoil futures settled $0.02 lower at $28.34. 

In the outside markets, the Brent Crude oil market is $0.58 lower per barrel, the U.S. dollar is unchanged, and the Dow Jones Industrials are 33 points higher.

 Mike

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At mid-session:

At mid-session, the Dec. corn futures are trading 2 1/2 cents lower at $3.88.  Nov. soybean futures are trading 8 cents higher at $8.89.

Dec. wheat futures are trading 1/2 of a cent higher at $5.12.

Dec. soymeal futures are $4.00 per short ton higher at $308.30. Dec. soyoil futures are trading $0.13 higher at $28.49. 

In the outside markets, the Brent Crude oil market is $0.40 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 8 points higher.

 Mike

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In early trading:

At 9am, the Dec. corn futures are trading 3/4 of a cent higher at $3.92.  Nov. soybean futures are trading 1 cent higher at $8.82.

Dec. wheat futures are trading 1/4 a cent lower at $5.11.

Dec. soymeal futures are $1.10 per short ton higher at $305.40. Dec. soyoil futures are trading $0.01 higher at $28.37. 

In the outside markets, the Brent Crude oil market is $0.11 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 32 points higher.

 Mike

 ---------------

At 7:00am:

Early calls: Corn 1-2 cents higher, soybeans 4-6 cents higher and wheat 2-4 cents higher. The USDA releases its October Supply/Demand Reports at 11:00am CT today.

Trackers:
Overnight grain, soybean markets = Trading higher.
Brent Crude Oil = $0.61 higher.
Dollar =Lower.  
Wall Street = Seen higher, with market digesting the Fed speech and earnings.

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

More in a minute,

Mike

[marketeye]

Big soybean purchase by the Chinese, Friday, according to the USDA.

Private exporters reported to the U.S. Department of Agriculture export sales of 360,000 metric tons of soybeans for delivery to China during the 2015/2016 marketing year.

The marketing year for soybeans began Sept. 1.

[roarintiger1]

Lower ending stocks for soybeans..........even with raising the yield and cutting exports..    Very interesting.

[marketeye]

Bonus coverage from Brazil:

Darlene Santiago, Successful Farming-Brasil Editor
 
The Brazilian grain production may reach 213.5 million metric tons, according to the first survey of the season 2015/2016, released by the National Supply Company (Conab), on 9 October. Growth will be up 1.7% compared to the previous harvest. The total planted area may range from 58.16 million hectares and 59.02 million hectares (143.7 million acres / 145.8 million acres). The most optimistic scenario indicates that the growth would be 1.5% compared to the area planted the previous season.
 
Soybean will continue as flagship of Brazilian agriculture, with growth of production up to 5.9%. Brazil expects a record in production, surpassing for the first time the number of 100 million metric tons. According to Conab, the Brazilian producers can harvest up to 101.9 million metric tons in the 2015/2016 harvest, compared with production of 96.2 million metric tons in the previous season. The area planted with soybeans can move up to 3.6%, with an area of 32.64 million hectares (80.6 million acres).
 
There is a corn downward trend in the first harvest, which will lose space for soybeans. Estimates for total corn production - the sum of the first and the second harvest 2015/2016 - point to a production of up to 83.5 million metric tons against 85.4 million metric tons harvested in the 2014/2015 crop. The total corn acreage could be up to 15.56 million hectares (38.44 million acres).
 
The complete study of Conab estimates Brazilian production of soybeans, corn, cotton, wheat, rice, beans, sunflower, peanut, castor beans, oats, canola, barley and rye.