Grain Markets Shocked by Higher USDA Estimates

The USDA took grain markets by surprise with the numbers in its August supply/demand report on Wednesday morning. Corn, soybeans and canola futures dropped sharply following the much larger than expected production and ending stock estimates.

Soybean ending stocks for 2015-16 were pegged at 470 million bushels — up from the USDA’s estimate of 425 million, and significantly higher than the average trade guess prior to the report of 301 million bushels. The average soybean yield forecast at 46.9 bushels per acre, versus 46.0 in July and the average analyst estimate of around 44.7.

For corn, the USDA also raised its estimates from July, with the ending stock estimate up more than 100 million bushels to 1.71 billion bushels (the average trade guess was 1.42 billion.) Corn yield was estimated at 168.8 bushels per acre, where the average analyst forecast was 164.5.

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The wheat estimates in the report were less bearish, as U.S. ending stocks were pegged at 850 million bushels when the trade was expecting 858 million. Global wheat ending stocks were raised to 221 million tonnes, versus the average trade estimate of around 218 million.

As Errol Anderson of ProMarket Communications in Calgary notes in the interview below, the sell-off in ag commodities was compounded by the overall commodity slide as the Chinese devalue their currency:

Some of the reaction to the report on Twitter:

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