WINNIPEG, (MarketsFarm) – The United States Department of Agriculture (USDA) September supply and demand report saw downward revisions for corn and soybeans, but kept its estimates for wheat where they were in August,
The department released its World Agricultural Supply and Demand Estimates (WASDE) on Sept. 12.
“Prices rallied after the report came out because of the larger than expected drop in the ending stocks for soybeans,” commented Terry Reilly, grains analyst for Futures International in Chicago, Ill.
Steve Georgy, president of Allendale Inc. in McHenry, Ill. pointed out the USDA cut its forecast for 2019/20 soybean ending stocks from 755 million bushels to 640 million.
“And that’s without any kind of demand,” he said, noting trade expectations were around 660 million bushels.
As well in the WASDE, the production estimate went from 3.680 billion bushels down to 3.633 billion, as yield projections were downgraded from 48.5 bushels per acre (BPA) to 47.9.
Trade expectations on soybean yields ranged from 46.0 to 48.4 BPA, with MarketsFarm having predicted 47.5.
In the WASDE, the corn yield was lowered from 169.5 to 168.2 BPA. Trade expectations were between 162.0 to 169.6 BPA, with MarketsFarm at 168.0.
Despite bearish numbers for corn, Reilly said bids rallied in part on spillover from soybeans at the Chicago Board of Trade (CBOT).
“Prices are getting a boost as there’s speculation the USDA will continue downgrading the U.S. yields,” he stated.
The USDA reported corn production would decline from 13.901 billion bushels to 13.799 billion. Ending stocks for 2019/20 were forecast to increase slightly from 2.181 billion bushels to 2.190 billion.
Reilly said the report was neutral when it came to U.S. wheat, the USDA kept yields at 51.6 BPA, production at 1.980 billion bushels and 2019/20 ending stocks at 1.014 billion.
However, Georgy expressed concern about the size of the carryout.
“Anytime you’re looking at a billion carryout, that’s just a lot of wheat,” he said.
Reilly said to keep an eye on coming U.S./China trade talks.
“My biggest fear is if a trade deal doesn’t get done, then the USDA will be forced again to address the current U.S. balance sheet on the demand side for soybeans,” Reilly said.
Georgy added there have been unconfirmed rumours on Thursday that China purchased 600,000 tonnes of U.S. soybeans.