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USDA Report Sparks Market Rally

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Arlan Suderman
Arlan Suderman

Tuesday’s USDA World Supply and Demand Report sparked a rally in corn, wheat, and soybean prices.  While the numbers were not that bullish, they were not as bearish as the market had been expecting. Alan Suderman, with F C Stone, said, “The numbers differed from what traders had expected, and, since the market had gone into the report on the down side, we saw a nice jump in prices on Tuesday.”  Suderman told HAT there was nothing in the report that would turn the market around, “The report was not that bullish, it just was not as bearish as many had anticipated.”  He said now the focus will move toward the South American crop as well as acreage number for the 2016 US crop. “The consensus in the market is that we will not have any problems getting this 2016 crop in the ground in the Midwest,” stated Suderman.

Bill Gentry, with Risk Management Commodities, said, “While the market did rally on short covering today, the report really didn’t change the big picture that much. The question is will we see more short covering to carry us to some higher prices; possibly, but a trend changer this wasn’t. We still need to have orders in to sell above the market because the highs of today came early and were never really challenged again.” He added that the market did not make any technical advances in Tuesday’s trade.

WASDE at a glance:

CORN: Corn production for 2015-16 was estimated .9 bushel per acre lower to 168.4. Harvested area was raised slightly and total production is estimated to be the third largest crop at 13.6 billion bushels. Projected use reduced slightly with lower projected for seed and industrial uses along with exports. Ending stocks are estimated at 17 million bushels higher at 1.8 billion, the highest levels since the 2005-2006 marketing year. Price range estimates are placed between $3.30 to $3.90 a bushel. Global corn ending stocks are estimated at 2.9 million tons lower to 28.9 million tons, still a record, with China holding more than half.

SOYBEANS: Soybean production is estimated at 3,930 million bushels, down 51 million on lower harvested area and yields.  Harvested area is estimated at 81.8 million acres, down 0.6 million from the previous forecast.  Yield is estimated at 48.0 bushels per acre, down 0.3 bushels, but still a record.  With lower supplies, exports are reduced 25 million bushels to 1,690 million.  Ending stocks are projected at 440 million bushels. Farm price is estimated at $8.05 to $9.44 per bushel.

WHEAT: Feed use was lowered by 30 million bushels for the 2015-16 crop year. Seed use was lowered by 6 million bushels on the winter wheat planted area. US Supplies were lowered 6 million bushels for the current crop year, and ending stocks were raised 30 million bushels. USDA estimated farm price was pegged between $4.90 and $5.10 per bushel. Global wheat supplies were raised 1.2 million tons. World wheat production remains record high, while world use was trimmed slightly.

SORGHUM: Sorghum production is estimated 3 million bushels higher as an increase in harvested area more than offsets a reduction in yield. The sorghum farm price is lowered 20 cents at the midpoint to a range of $3.05 to $3.55 per bushel, reflecting the weakening relationship to cash corn prices in interior markets.