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Thursday, September 12, 2013

The September Soybean Surprise and Corn Disappointment



 

The September Crop Production Report from the U. S. Department of Agriculture carried a surprise for the soybean market, as supplies diminished from heat, lack of moisture, and continued demand at bargain prices.  Although USDA trimmed demand projections, and raised the season average price, the resulting small carryover at this time next year was enough for the bulls to stampede on Chicago’s LaSalle Street where the Board of Trade recorded a 56 cent trading range, closing at the high end.  And then there was corn.

 

Soybeans

 

USDA’s September Crop Production Report projected a 3.149 billion bushel soybean crop with a 41.2 bushel average yield over 76.378 million acres.  The yield was a 1.4 bushel cut from August and acreage remained the same, while total production dropped 106 million bushels, due to lower yield prospects in the western Cornbelt. 

 

State

Aug

Sept

2013 Production

IL

47

46

430,100,000

IN

50

48

251,040,000

IA

46

43

405,490,000

KS

36

36

132,840,000

MI

45

43

81,270,000

MN

41

39

258,570,000

MO

39

35

197,400,000

NE

47

47

223,250,000

ND

32

29

126,440,000

OH

50

49

206,100,000

SD

36

35

141,300,000

WI

42

40

66,800,000

 

In its Supply and Demand estimate, USDA clipped 15 million bushel on the export estimate, allowing it to cut those to 1.37 billion, and the crush was lower 20 million bushels to 1.655 billion, leaving ending stocks at 150 million bushels.  The low stocks estimate is what set the market afire.  Due to the tighter stocks, USDA raised the estimated farmgate price by $1.15 on each end to a range of $11.50 to $13.50.  Many analysts expressed concerns that USDA can't be realistic on soybean production and demand, cutting demand while demand is currently strong.  They say it doesn't add up.  Nevertheless the USDA does not like to draw stocks down much lower than 150 million bushels.  The economists say it is a strong signal to South American farmers to plant more soybeans in the next month.

 

  12-13 estimate 13-14 projection
area planted 77.2 mil. 77.2 mil.
area harvested 76.1 mil. 76.4 mil.
yield per acre 39.6 bu 41.2 bu.
beginning stocks 169 mil 125 mil.
Production 3.015 bil. 3.149 bil.
imports 40 mil. 15 mil.
total supply 3.224 bil 3.289 bil
crush 1.690 bil. 1.655 bil.
exports 1.315 bil 1.370 bil.
seed 90 mil. 87 mil.
residual 5 mil. 28 mil.
total use 3.099 bil 3.140 bil.
ending stocks 125 mil 150 mil
farmgate price $14.40 $11.50-13.50

 

Corn

 

 

USDA forecast a record corn crop of 13.843 billion bushels, which is based on a yield of 155.3 bushels per acre.  The market was surprised by the yield estimate, anticipating a cut due to the late August heat and lack of water around most of the Cornbelt.  And if the yield cut was not made, the trade was expecting a possible cut in harvested acreage, which also did not happen.  The USDA left the latter unchanged at 89.1 million acres.  The USDA’s crop enumerators were in the fields making estimates from August 29 to September 6, possibly too early to detect the “flash drought” going on at that time.  With no soil moisture and heat above 90 degrees, many corn fields quickly matured and lost yields.  USDA only cut Iowa and Wisconsin yields by 1 bushel per acre and kept steady from August the yield estimates in Minnesota, Illinois, Indiana, Ohio, and Michigan.  Illinois recorded its 3rd driest August on record.  There were 5 bushel per acre cuts in Missouri and North Dakota, along with 7 bushel increases in South Dakota and a 9 bushel increase in Kansas

 

 

State

Aug

Sept

2013 Production

IL

165

165

1,963,500,000

IN

166

166

979,400,000

IA

163

162

2,178,000,000

KS

116

125

525,000,000

MI

158

158

390,260,000

MN

166

166

1,361,200,000

MO

130

125

406,250,000

NE

161

164

1,607,200,000

ND

116

111

399,600,000

OH

172

172

632,960,000

SD

138

145

768,500,000

WI

144

143

464,750,400

 

With the increased estimates for production, corn prices traded in a 16 cent range during the day Thursday and settled at the midpoint—continuing the summer long downtrend.  The report likely shifted plans by some South American farmers to plant corn, who would be doing so in the coming few weeks.

 

 

 

12-13 estimate

13-14 projection

area planted

97.2 mil.

97.4 mil.

area harvested

87.4 mil.

89.1 mil.

yield per acre

123.4 bu

155.3bu.

beginning stocks

989 mil

661 mil.

Production

10.780 bil.

13.843 bil.

imports

162 mil.

25 mil.

total supply

11.931 bil

14.530 bil

feed & residual

4.475 bil.

5.100 bil.

Food, seed, Indus.

6.060 bil

6.350 bil.

Ethanol & by-prod

4.665 bil.

4.900 bil

Domestic total

10.535 bil

11.450 bil.

exports

735 mil.

1.225 bil.

total use

3.099 bil

3.140 bil.

ending stocks

661 mil

1,855 bil.

farmgate price

$6.90

$4.40-5.20

 

Posted by Stu Ellis on 09/12 at 10:39 PM | Permalink

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