Economy

CBOT corn futures lower

CBOT corn futures lower”

Corn and soybean stocks were lower than expected. Analysts expect that USDA will reduce the 2016/17 harvest by just 2 million bushels, but the range on crop size is relatively wide - between 4.26 billion and 4.337 billion bushels. The smallest final residual in recent memory is minus 2 million bushels and USDA now has 14 million bushels slated for 2016/17, implying that a shocking inflation to stocks would less likely be rooted in residual changes. Keep in mind that USDA could be changing corn or soybean production from 2016 with this report. They have a strong history of changing the previous years' soybean production with this report. Many expected the price action for soybeans today to be quite volatile.

By adding the estimates for exports and domestic uses, the total use of corn during the fourth quarter is estimated at 2,891 million bushels. Before the report, corn was down 2 cents, soybeans down 3 cents, and wheat was down 1 cent.

The futures of Corn and Wheat went down 1.5 to 6.5 cents as the latest export sales were near to below expectations. Wheat was down 3 to 12.5 cents at midday. USDA trimmed the 2015/16 crop by 3 million bushels and analysts were too high on September 1 soybean stocks by 4 million bushels.

USDA raised its forecast of 2017 wheat production by 2 million bushels to 1.741 billion. While this summer figure is tricky to interpret long term, it suggests summer feed usage was around 80 million bushels less than past year.

Wheat stocks as of September 1 dropped to 2.253 billion bushels from 2.545 billion bushels as USA production dropped off amid rising global competition. Weekly estimates of ethanol production provided by the Energy Information Administration indicates ethanol production increased by 2.7 percent in August 2017 from the preceding year. Those five days of 90 degree days were enormous in pushing crops to final maturity. With this excellent weather for soybean harvest there should be minimal concerns of getting those wheat fields planted that follow soybeans.

Today's reports continue the tradition for the trade to be surprised by these numbers. The agency's stocks estimate for wheat was higher than trade guesses, implying lower summer feeding. Export sales for corn continue to be disappointing with the sales report on Thursday showing just 12 million bushels of USA corn export sales were done this past week.

November soybeans rose 15.75 cents by midday.

It seems as if analysts either forget to factor into their stock estimates a change to the previous year's soybean crop - which had been harvested almost a year earlier - or they have bad luck in guessing those production changes.

Either way, last year's carryout will still end up the largest in 10 years and at least 50 percent larger than the previous two years.

Producers in the Midwest have been actively selling soybean off the combine so far this fall.

In a separate report due Friday, analysts expect the USDA to show wheat production at a decade low after farmers reduced acreage and a drought in the northern Plains damaged the spring wheat crop there. Harvest acres were down 40,000 and the yield fell one-tenth of a bushel per acre to 52 bpa. It has been wet in Argentina but dry in Brazil. Rains are expected in Brazil next week, which has been contributing to the weakness in soybeans this week.



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