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Yet Another USDA Surprise (1/12/12)

January 12, 2012

Chad Hart , ISU Extension Grain Marketing Specialist, provides a summary of the latest report from USDA.

With today’s triple set of reports (Crop Production, Grain Stocks, and World Ag. Supply & Demand), market traders received another set of numbers that surprise.  For corn and soybeans, the yield, production, and stocks numbers were all higher than expected.  Throw in another cut in soybean demand and we’re staring at a bear’s day in the market.

For soybeans, USDA found slightly fewer harvested acres, but higher yields at 41.5 bushels per acre.  The combination led to production of 3.056 billion bushels, up 10 million from the previous estimate and 14 million larger than the average trade estimate.  Iowa’s soybean yield was held steady at 50.5 bushels per acre, down 0.5 bushel from 2010.  On the demand side, domestic crushing and exports were both lowered, crush by 10 million bushels and exports by 25 million bushels.  The end result is 2011/12 ending stocks estimated at 275 million bushels, up 45 million from last month.  The projected 2011/12 season-average price for soybeans held steady at $11.70 per bushel.

For corn, more harvested area and a 0.5 bushel bump in yields raised the production estimate to 12.358 billion bushels, up 48 million from last month and 78 million above the average trade estimate.  Iowa’s corn yield was raised to 172 bushels per acre, up 1 bushel from last month and up 7 bushels from 2010.  The only demand adjustment was an 50 million bushel increase in exports.  These changes left 2011/12 ending stocks fairly steady at 846 million bushels.  The projected 2011/12 season-average price for corn dropped 20 cents to $6.20 per bushel.

Grain stocks as of December 1 were also higher than expectations.  Corn stocks came in at 9.64 billion bushels, down 4 percent from last year, but roughly 200 million bushels above expectations.  Soybean stocks were at 2.37 billion bushels, up 4 percent from last year and about 60 million above expectations.

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