PF Reaction: Soybeans Extend Gains after USDA Reports Come in About as Expected

Posted on Fri, 09/11/2020 - 11:44

Market reaction

Ahead of USDA's reports, corn futures were trading 1 to 2 cents higher, soybeans were 9 to 11 cents higher, wheat futures were mixed and cotton futures were mostly around 30 points higher.

After the reports, corn futures have pulled back to trade mixed to lower, and soybeans have extended gains to trade 5 to 25 points higher. Wheat futures are now posting losses ranging from 2 to 5 cents. And cotton futures have shot roughly 50 to 60 points higher.

 

Crop production

Corn: 14.900 billion bu.; trade expected 14.898 billion bu.
— compares to 15.278 billion bu. estimated in August
Beans: 4.313 billion bu.; trade expected 4.295 billion bu.
— compares to 4.425 billion bu. estimated in August
Cotton: 17.064 million bales; trade expected 17.57 million bales

— compares to 18.080 million bales estimated in August

USDA’s corn crop estimate is down 378 million bu. from August and right in line with the average pre-report trade estimate. USDA estimates the corn yield at 178.5 bu. per acre, down 3.3 bu. from last month. USDA cut harvested corn acreage by 550,000 acres to 83.473 million acres, with all of that reduction coming in Iowa after the Aug. 10 derecho.  

USDA’s initial objective yield data showed the second most ears per acre in the 10 survey states, behind 2018.

Corn yields are estimated lower than last month in Illinois (down 4 bu. to 203 bu.), Indiana (down 2 bu. to 186 bu.), Iowa (down 11 bu. to 191 bu.), Kansas (down 7 bu. to 136 bu.), Michigan (down 6 bu. to 162 bu.), Missouri (down 6 bu. to 169 bu.), Nebraska (down 3 bu. to 188 bu.) and Ohio (down 3 bu. to 172 bu.). Yield estimates were up from August in Minnesota (up 3 bu. to 200 bu.), North Dakota (up 2 bu. to 157 bu.), South Dakota (up 1 bu. to 168 bu.) and Wisconsin (up 1 bu. to 182 bu.).

USDA’s soybean crop estimate is down 112 million bu. from last month but 18 million bu. higher than traders expected. USDA estimates the soybean yield at 51.9 bu. per acre, down 1.4 bu. from last month. USDA did not change harvested acres for soybeans.

USDA’s initial objective yield data showed the second most pods per 18 square feet in the 11 survey states, behind 2018.

Soybean yields are estimated lower than last month in Illinois (down 2 bu. to 62 bu.), Indiana (down 1 bu. to 60 bu.), Iowa (down 4 bu. to 54 bu.), Kansas (down 2 bu. to 44 bu.), Michigan (down 3 bu. to 48 bu.), Missouri (down 2 bu. to 51 bu.), Nebraska (down 2 bu. to 60 bu.), Ohio (down 2 bu. to 56 bu.) and South Dakota (down 2 bu. to 48 bu.). Yield estimates are unchanged from last month in Arkansas (49 bu.), North Dakota (36 bu.) and Wisconsin (54 bu.). The yield estimate is up in Minnesota (up 1 bu. to 52 bu.).

Note: USDA’s NASS will resurvey Iowa farmers for harvested corn and soybean acres again for the October report as many producers indicated they were still finalizing decisions on wind-damaged acres when the September survey was completed. NASS also says this month’s estimates were as of Sept. 1. Any impacts from this week’s frost/freeze will be reflected in future reports.  

USDA’s cotton crop estimate is down 1.016 million bales from last month and 506,000 bales less than the average pre-report estimate. USDA lowered the estimated yield by 28 lbs. from last month to 910 lbs. per acre. USDA cut harvested cotton area by 242,000 acres to 9.005 million acres.

USDA cut estimates yields in the top two production states. In Texas, the yield was cut 37 lbs. to 737 lbs. per acre. In Georgia, the yield was reduced 71 lbs. to 932 lbs. per acre.

 

U.S. carryover

Corn: 2.253 billion bu. for 2019-20; up from 2.228 billion bu. in August

— 2.503 billion bu. for 2020-21; down from 2.756 billion bu. in August

Beans: 575 million bu. for 2019-20; down from 615 million bu. in August

— 460 million bu. for 2020-21; down from 610 million bu. in August

Wheat: 925 million bu. for 2020-21; unchanged from 925 million bu. in August

Cotton: 7.25 million bales for 2019-20; up from 7.20 million bales in August

— 7.20 million bales for 2020-21; down from 7.60 million bales in August

USDA increased old-crop corn carryover 25 million bu. from last month. The department increased estimated corn-for-ethanol use 5 million bu. from last month but cut estimated exports 30 million bushels. The national average on-farm cash corn price is unchanged at $3.60 per bushel.

New-crop corn carryover of 2.503 billion bu. is down 253 million bu. from USDA’s estimate last month but 52 million bu. above the average pre-report trade estimate. USDA cut total supplies 353 million bu. due to the 378-million-bu. cut to the corn crop. On the demand side, USDA cut feed and residual use 100 million bu. (to 5.825 billion bu.) and cut food, seed & industrial use 100 million bushels (with all of it coming out of the corn-for-ethanol, which now stands at 5.1 billion bu.). Those cuts were partially offset by a 100-million-bu. increase in estimated exports (to 2.325 billion bu.). USDA now puts the national average on-farm cash corn price at $3.50 per bu., up 40 cents from last month.

Old-crop soybean carryover was cut 40 million bu. from last month. USDA increased imports 1 million bu. to increase total supplies by that amount. On the demand side, USDA increased estimated crush 10 million bu. (to 2.170 billion bu.), raised estimated old-crop bean exports 30 million bu. (to 1.680 billion bu.) and increased estimated residual by 1 million bu. (to -45 million bu.). USDA puts the national average on-farm cash bean price for 2019-20 at $8.55 per bu., unchanged from last month.

New-crop bean carryover is down 150 million bu. from last month and is just 5 million bu. below the average pre-report trade estimate. USDA cut total supplies 152 million bu. from last month thanks to the cut to beginning stocks and a 112-million-bu. cut to the 2020 bean crop. On the demand side, USDA trimmed total use by 3 million bu., with all of the change coming from smaller residual use. USDA puts the national average on-farm cash bean price at $9.25 per bu., up 90 cents from last month.

USDA’s 2020-21 wheat carryover projection is unchanged from last month and just 1 million bu. above the average pre-report trade estimate. There were no changes to the supply- or demand-side of the balance sheet. USDA left the national average on-farm cash wheat price unchanged from last month at $4.50 per bushel.

USDA’s 2020-21 cotton carryover estimate is down 400,000 bales from August, its forecast is still about 200,000 bales above the average pre-report trade estimate. USDA raised beginning stocks 50,000 bales but cut the crop by slightly more than 1 million bales from last month. On the demand side of the balance sheet, it cut total use 600,000 bales, with domestic use down 200,000 bales (to 2.5 million bales) and exports down 400,000 bales (to 14.6 million bales). USDA left the national average on-farm cash price for 2020-21 unchanged from last month at 59 cents.

 

Global carryover (without China)

Corn: 108.08 MMT; up from 107.23 MMT in August

— 117.75 MMT for 2020-21; down from 123.41 MMT in August

Beans: 68.75 MMT; down from 68.60 MMT in August

— 66.33 MMT for 2020-21; down from 68.10 MMT in August

Wheat: 148.10 MMT; down from 149.23 MMT in August

— 155.69 MMT for 2020-21; up from 154.11 MMT in August

Cotton: 62.54 million bales for 2019-20; down from 63.81 million bales in August

— 67.32 million bales for 2020-21; down from 69.29 million bales in August

 

Global production highlights

Argentina beans: 49.7 MMT for 2019-20; compares with 49.7 MMT in August

— 53.5 MMT for 2020-21; compares with 53.5 MMT in August

Brazil beans: 126.0 MMT; compares with 126.0 MMT in August

— 133.0 MMT for 2020-21; compares with 131.0 MMT in August

Argentina wheat: 19.75 MMT; compares with 19.75 MMT in August

— 19.5 MMT for 2020-21; compares with 20.5 MMT in August

Australia wheat: 15.2 MMT; compares with 15.2 MMT in August

— 28.5 MMT for 2020-21; compares with 26.0 MMT in August

China wheat: 133.59 MMT; compares with 133.59 MMT in August

— 136.0 MMT for 2020-21; compares with 136.0 MMT in August

Canada wheat: 32.35 MMT; compares with 32.35 MMT in August

— 36.0 MMT for 2020-21; compares with 34.0 MMT in August

EU wheat: 154.94 MMT; compares with 154.94 MMT in August

— 136.15 MMT for 2020-21; compares with 135.5 MMT in August

Russia wheat: 73.61 MMT; compares with 73.61 MMT in August

— 78.0 MMT for 2020-21; compares with 78.0 MMT in August

Ukraine wheat: 29.17 MMT; compares with 29.17 MMT in August

— 27.0 MMT for 2020-21; compares with projection of 27.0 MMT in August

China corn: 260.77 MMT; compares with 260.77 MMT in August

— 260.0 MMT for 2020-21; compares with 260.0 MMT in August

Argentina corn: 50.0 MMT; compares with 50.0 MMT in August

— 50.0 MMT for 2020-21; compares with 50.0 MMT in August

Brazil corn: 102.0 MMT; compares with 101.0 MMT in August

— 110.0 MMT for 2020-21; compares with 107.0 MMT in August

Ukraine corn: 35.89 MMT; compares with 35.89 MMT in August

— 38.5 MMT for 2020-21; compares with 39.5 MMT in August

South Africa corn: 16.25 MMT; compares with 16.25 MMT in August

— 14.0 MMT for 2020-21; compares with 14.0 MMT in August

China cotton: 27.25 million bales; compares with 27.25 million bales in August

— 27.25 MMT for 2020-21; compares with 26.5 million bales in August