USDA adds to bearish tone with higher than expected corn and soybean yield and carryout estimates

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The U.S. Department of Agriculture added to the bearish tone in grain markets with larger-than-expected yield, production and stocks estimates in a series of reports published on Friday.

Both the headline corn and soybean yield numbers for 2023 were higher than all trade estimates prior to the report, with corn yield pegged at a record 177.3 bu/ac, well above average trade guess of 174.9, which was also the USDA’s November estimate. The yield increase was partially offset by a reduction in harvested acres, with corn production estimated at 15.34 billion bushels, versus expectations of around 15.23 billion.

The USDA’s soybean yield also exceeded the range of pre-report estimates, coming in at 50.6 bu/ac, compared with an average trade estimate of 49.9 bu/ac. U.S. soybean production was pegged at 4.17 billion bushels, compared with expectations of 4.13 billion.

Globally, the world corn ending stock estimate published by the USDA was larger than expected, at 325 million tonnes, up from 315 million last month, and above trade estimates of around 313.

The world soybean carryout number for 2023/24 came in just under 115 million tonnes — about 3 million higher than expected by the trade.

As for wheat, the department’s world wheat ending stock estimate was 260 million tonnes, compared with 258 million last month. On the bullish side, U.S. winter wheat acres came in lower than all trade estimates at 34.4 million, down from 36.7 million last year.

The dump of USDA reports on Friday included the January Crop Production, World Agricultural Supply and Demand Estimates (WASDE), Dec. 1 Grain Stocks, and Winter Wheat Seedings reports.

While there was some talk of prices breaking through support to the downside with bearish news, nearby corn futures ended trade on Friday down only around 10 cents a bushel, while old crop soybeans were down around 12 cents. Nearby wheat futures in Minneapolis were only down a cent or less.

Chip Flory, host of AgriTalk, called the record national average corn yield is an “attitude adjuster” for the corn market looking into the 2024 growing season. “Traders will clearly have a ‘prove it’ attitude when it comes to talk of crop damage if conditions are less than ideal,” he says.

Quarterly grain stocks reports have a history of generating volatility in the grain markets, Flory adds. After these yield increases for corn and soybeans in the Annual Production Summary, traders will be watching for any sign that those yield advances will have to be walked back later in the year.

“If you really want to get to the bottom line of these reports, go to the Global S&D numbers,” Flory says. “Year-to-year trends in global corn and soybean carryovers will be a wet blanket over those markets in the year ahead. The year-to-year drop in global wheat carryover and cut to U.S. winter wheat seedings is suggesting the wheat market may have already overdone the move to the downside.”

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