MINNEAPOLIS — Reductions in crop production estimates stirred the market Oct. 9 after the U.S Department of Agriculture’s reports.
“After seeing an exciting week of trading, we topped it off with the report, which also brought a little excitement. It was friendly for soybeans and neutral to slightly negative for wheat and corn,” Randy Martinson, Martinson Ag Risk Management, said in a Minneapolis Grain Exchange-hosted teleconference.
What sparked the green screen in the soybean market?
“The friendliness was from new crop soybeans. We saw a reduction in planted and harvested acres. Yield was left unchanged, which is still a very good yield for what’s out there. Production was reduced by 45 million bushels from September.
“Soybean exports were increased by 75 million bushels, which I thought was a bold move in this report. The exports have been going fantastic. We’re already at 70% of expectations of what we’ve sold.
“Shipments haven’t been there yet, so I’m a little concerned that USDA pushed this by another 75 million when we’re not seeing the shipments keep up to where the sales are at and knowing that South America will grab a lot of exports once we get past the first of the year.”
Was there anything supportive in the old crop soybeans balance sheet?
“The old crop soybeans came in pretty close to expected. There were minor adjustments to the real numbers such as the imports, exports, crush and the seed.
“It was the catchall — the residuals — that saw the change. They’re basically saying we don’t know where this number is coming from, but we’re going to put it in residuals.”
Were there any similar surprises in the corn crop production and supply and demand reports?
“For new crop corn I thought the numbers were actually neutral to a little negative as we saw the ending stocks estimate increase a little bit more than what was anticipated by the trade estimates. Corn production was down 178 million bushels from last month.
“For the old corn crop we pretty much came in as expected. USDA did make those cuts that we’ve been kind of telegraphing and expecting to see happen and it came in with the stocks right at 1.995 billion bushels.
“I’ve been one that’s been a proponent that we’ve been using more corn for feed than what’s been estimated by USDA, so today was kind of vindication for me of sorts where we finally see that big increase.
“You can’t have cattle, hog and poultry numbers increasing and not see more feed demand. It was kind of a nice true up that we saw USDA come to that today.
“We did see that cut in acres that I thought was needed. Up here in the Northern Plains we didn’t get as much planted as anticipated, what we did get planted looks like it’s going to be a good crop.
“North Dakota was cut by another 450,000 planted and 410,000 harvested acres. South Dakota was down another 360,000 harvested corn acres. Illinois saw 500,000 more harvested corn acres.
“Overall, I think the numbers were as expected, maybe a little negative with corn.”
There has been plenty of speculation about how many corn acres were destroyed with the derecho wind storm hit Iowa on Aug. 10, flattening large areas of corn. Did this report show any other information related to the damage?
“Another 300,000 corn planted and harvested acres were dropped in Iowa and yield was dropped another 5 bushels. Production was reduced by 120 million bushels. Last month, USDA reduced Iowa harvested acres by 550,000.
“Of course, it was going to take time to see what crop was going to be able to be harvested and what wasn’t. I think USDA has been prudent in what they’ve been doing there.”
The October reports provided a needed boost to corn and soybean prices.
“We saw both corn and soybeans close right at resistance levels, that $10.65 in the November soybeans, the $3.90 in the December corn. We’ll see if weather holds or if no rain shows up if we can continue to see some strength come next week.
“I was surprised that corn was able to hold on to its gains throughout the day (of the report), but I think it was being pulled because of the soybeans and because of the dry conditions that are still being reported in Brazil and Argentina and the fact that Brazil had some rain events forecasted 10 days out that actually was reduced in one of the weather models. I think that’s where the support came from today more than anything.”
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October 20, 2020 at 08:31AM
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Lower production stirs market excitement | agrinews-pubs.com - Agri News
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