Grain and soybean prices tumbled to multiweek lows Tuesday after the U.S. Department of Agriculture forecast larger domestic crops and supplies than analysts were expecting.
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The USDA’s monthly report, to be released on Tuesday, is expected to show that domestic soybean production and yields were bigger than previously forecast despite a reduction in the estimate of harvested acreage.
The U.S. corn yield was raised to 169.3 bushels per acre versus 168.0 bpa in October and the average trade guess of 168.4 bpa.
“USDA’s 50-million bushel cut in wheat export was right in line with my forecast”.
World corn ending stocks were projected at 211.91 million tonnes for 2015-16, up from 187.83 million tonnes in October and up from 208.21 million tonnes forecast for 2014-15.
The U.S soybean harvest was pegged at 95 percent complete, 3 percent ahead of the five-year average.
USDA’s November Crop Production report stayed true to the old adage that big crops get bigger. “Recently I have been focused on an alternative scenario where field crop prices move sideways into the second half of next year before a serious bottom is in place and price relief emerges”. The U.S.D.A. 2016 corn carryover was above the pre-report trade average expectation of 1,587 million bus. Whole bean exports are estimated at more than 1.7 billion bushels, up 40 million from October’s report.
United States officials lifted their estimate of American and global corn production, while lowering their estimate of consumption in major markets, like China and the European Union, although consumption was tipped to rise in Brazil and Argentina. US production, exports, and ending stocks data will help shape price direction going forward and the direction of the USA dollar index as well is its relative strength against world currencies will help paint a better picture of cotton demand.
-The meat production forecasts were left largely unchanged.
The USDA lowered its outlook for corn exports and use by ethanol makers, boosting ending stocks to a decade high. Ending stocks are now estimated at 911 mb, which is near the high end of pre-report estimates. If realized, this will be the highest soybean production on record, 5 percent above the 525 million bushels produced in 2005.
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“We’re seeing a turn-around from yesterday when we played [grain markets] to the downside”, said Bill Gentry, a broker with Risk Management Commodities Inc.in Lafayette, Ind., noting that market activity on Wednesday suggests traders don’t see a need to push prices lower.
