This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
September USDA supply and demand report was pretty much a yawner. The September report historically is not a big market mover because we have not seen enough harvest data yet to be incorporated into the data. The report is the first one that incorporated objective yield estimates from the field. USDA enumerators go into the fields and measure ear weights and count soybean pods. These objective yield estimates are used in conjunction with updated farmer survey and satellite data to arrive at this yield estimate.
The bulls were hoping to see USDA trim corn and bean yields as we have seen some private estimates do over the last several weeks since the Profarmer tour. USDA left bean yield unchanged and raised corn yield half a bushel. They left harvested acres unchanged which left soybean production unchanged and corn production slightly higher. Market will be looking for harvested acres to be updated on the October report. What offset the bearish effect of production changes was adjustments to the old crop balance sheets. USDA increased ethanol and export demand in corn and domestic crush demand in beans. The reductions in old crop carryin offset the production increase in corn so USDA printed a slightly lower carryout for both corn and beans.
Overall I would call this a pretty neutral report. Market will be looking toward the quarterly stocks report that comes out Sept 30th. The October USDA supply and demand comes out October 11th and it will include both early harvest data and also may have an adjustment to harvested acreage.
The market will go back to trading the same things we have for the last few weeks. The crops may not be getting any bigger, but we still have record crops on the way in the US. Low prices are helping grow demand. We are seeing good ethanol usage and exports are picking up. Low water levels in the Mississippi are a threat to exports. At the beginning of the year soybean balance sheet looked much tighter than corn. Now beans look to have a much bigger cushion than corn but there are comfortable stocks in both. We need a weather problem in South America or somewhere in the world to scare the market. The funds still have a very large short position in both corn and beans so that will add some volatility if something spooks them to cover.